Chaebol help out in Kumho deal

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Chaebol help out in Kumho deal

Kumho Asiana Group Chairman Park Sam-koo has gained a strong ally in gaining back his company from creditors, as CJ Group has stepped up as a financial backer.

Other leading conglomerates including Lotte, SK and Hyosung are said to have come to the aid of the Kumho Asiana Group chairman as well.

On Friday, Chairman Park submitted detailed plans for securing the finances needed to purchase a controlling stake of Kumho Industrial from creditors led by Korea Development Bank (KDB). The full amount has to be paid by the end of the year.

The plans include a 50 billion won ($44 million) investment from CJ Group. This amount accounts for roughly 20 percent of the nearly 270 billion won that Park needs to repurchase a controlling 50 percent plus one share in Kumho Industrial.

“We have received requests from Chairman Park for support and we decided to invest,” a CJ official said. “We made the decision to maintain our business relationships in the logistics business, including Asiana Airlines and CJ Korea Express.”

Park currently has secured an estimated amount of 450 billion won to buy back the controlling stake of Kumho Industrial, for which the creditors are asking 722.8 billion won.

Of the 450 billion won, 150 billion won came from Park’s own pocket. Between Oct. 28 and Nov. 3, Park and his son Park Se-chang, co-CEO of Kumho Tire, sold off their shares in Kumho Industrial and Kumho Tire over the counter. The father and son sold off a combined 7.99 percent stake in Kumho Tire and a 9.85 percent stake in Kumho Industrial.

In addition, Park was able to secure the remaining amount thanks to the 300 billion won from loans Park took out from financial institutions, led by NH Investment & Securities. CJ is not the only conglomerate that has rushed to the aid of Chairman Park, as affiliates of major conglomerates including SK Energy, LG Chem, Lotte Chemical and Hanwha General Insurance are said to be participating as strategic investors that are not involved in management.

Including the 50 billion won from CJ, the total amount of investments from the business community is estimated at 270 billion won. As is the case with CJ, many of the companies investing in the share acquisitions have strong business relationships with Kumho Asiana Group.

LG Chem, Lotte Chemical, Kolon and Hyosung are suppliers of Kumho Tire, while SK Energy provides fuel for the airliner. The airliner is also a major client of Hanwha Non-Life Insurance.

The chairman created a special company whose sole purpose was to find strategic investors.

The creditors including KDB Bank will review the acquisition plan submitted by Chairman Park, including the size and share ratio of investors, and make its final decision on whether to accept by Nov. 20.

If the handover is successful, Park will regain his management rights of Kumho Industrial for the first time in six years, since the company went into a debt workout program in 2010 after facing a severe liquidity crunch.

Kumho Industrial plays a crucial role in the overall airliner conglomerate as it is the de facto holding company. Kumho Industrial owns a 30 percent stake in Asiana Airlines, the nation’s second-largest carrier.

Asiana Airlines is also the majority shareholder of Kumho Asiana Group affiliates, including the budget airline Air Busan and Kumho Terminal.

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