Kumho’s creditors settle on 722.8 billion won for top stake

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Kumho’s creditors settle on 722.8 billion won for top stake

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The creditors in control of Kumho Industrial, the holding company of Kumho Asiana Group, set the final price of a controlling stake in the company at 722.8 billion won ($610.2 million) - 54.4 billion more than their initial price suggested last month.

Kumho Asiana Group’s Chairman Park Sam-koo now has to decide whether to accept, which will mean raising 18.1 billion won more than the 704.7 billion won he has currently offered.

Park will be given until the end of this month to comply or pass.

“The creditors thought that the price suggested by Chairman Park was a bit insufficient,” said an official at the Korea Development Bank (KDB), which is the main creditor of Kumho Industries.

“The final price was assessed after considering various factors including the company’s value, share price and the industry’s worth.”

Early in the process, the 55 creditors expected Park to suggest between 730 billion won and 740 billion won for the controlling stake. Some of the creditors have asked for much more, such as Mirae Asset, which has been asking for 1.2 trillion won.

On Aug. 27, the creditors held an emergency meeting at the KDB’s headquarters in Yeouido, Seoul, where they tried to decide on a final price for the controlling stake.

But the meeting ended without any progress as Mirae Asset, which has the largest stake in the company at 8.55 percent, and others like the KDB could not narrow their differences.

At the time, the KDB suggested 793.5 billion won, which received the biggest support from 25 percent of the creditors. While some of the creditors - mostly financial companies, including commercial banks - suggested that the final price should be lowered to the 700 billion won range to speed up the sale process, Mirae Asset said it would accept nothing less than 860 billion won.

Since it bought the shares of Kumho Industrial for 60,000 won apiece using investments provided by private equity funds, selling it at a discounted price could result in a legal action against Mirae Asset by its own investors.

Mirae Asset invested in Kumho Asiana Group when it bought Daewoo E&C in 2006. But when the construction company was sold off as part of a workout in 2009, the investments in the construction company were converted into the Kumho Industrial shares that Mirae Asset has been holding to this day.

When Hoban Construction earlier this year turned out to be the sole bidder on Kumho Industrial, the creditors declined the mid-size construction company for offering only 600.7 billion won.

Afterwards, they decided to give the opportunity to Kumho Asiana Group Chairman Park.

The creditors consider the final 722.8 billion won as a fair price because it is more than 70 billion won cheaper than its earlier 793.5 billion won price tag.

The question remains whether Mirae Asset will accept the price since it is just 41,213 won per share, even though that’s still higher than Chairman Park’s original proposal of 37,564 won per share.

Friday’s decision came as a surprise to Kumho Asiana Group, which saw itself as doing its best to meet the creditors’ demands, offering 50 billion won more than the proposed price in August.

Still, Park will likely accept the deal because control of Kumho Industrial is strategically important, as the company is the de facto holding company of Kumho Asiana Group.

Kumho Industrial is the majority stakeholder of the nation’s second-largest airliner Asiana Airlines with a 30.08 percent stake.

The airliner has a majority stake in more than 20 affiliates under the Kumho Asiana banner, including Kumho Terminal.

Kumho Industrial shares went up 3.45 percent on Friday compared to the previous day to close at 19,500 won.


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]

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