Park’s control of Kumho group is completed

Kumho Asiana Group’s headquarters in Jongno District, central Seoul, on Tuesday. The conglomerate’s chairman, Park Sam-koo, was able to recover control of Kumho Industrial after six years. [NEWSIS]

Kumho Asiana Group Chairman Park Sam-koo has cemented his control over the group and its key affiliates after nearly six years. Park has paid 722.8 billion won ($617.9 million) to reacquire Kumho Industrial, the group said on Tuesday.

The 70-year-old chairman paid the money to Korea Development Bank (KDB), one of the majority creditors of Kumho Industrial, the holding company of Kumho Asiana Group. Park will get a 50 percent stake plus one share of Kumho Industrial, which was considered one of the biggest M&As this year. Control of the company gives Park command over the group’s other key affiliates such as Asiana Airlines, Air Busan, Kumho Terminal and Asiana IDT.

Park stepped down as chairman of the company when it went into a debt workout program in 2009 due to financial troubles, but was named head of the company again in November 2013. He has been trying to regain ownership ever since.

“It is now time to focus on key businesses, including airlines, tires and construction,” Park said in a statement.

Park had trouble raising the necessary funds and had to compete against Hoban Construction, which was interested in taking over Kumho Industrial. Park solved those problems through his wide personal network. Park has maintained a close relationship with other chaebol while working in several lobbying groups, including the Federation of Korean Industries and Korea-Japan Economic Association.

Park’s efforts paid off as CJ Group became a co-acquirer of Kumho Industrial. Through its affiliate CJ Korea Express Corporation, the group will acquire a 3.5 percent stake of Kumho Industrial for about 50 billion won. When Park and his eldest son, Park Se-chang, put up for sale shares of Kumho Industrial and Kumho Tire worth 152.1 billion won, companies such as CJ, Hyosung and Kolon stepped in as white knights to purchase them.

Among financial institutions, NH Investment & Securities was Park’s biggest helper, lending about 300 billion won.

But concerns remain about Kumho since it has a number of financial problems to deal with. Of the 722.8 billion won Park used to reacquire Kumho Industrial, about 570 billion won is a liability that he must pay back. And many Kumho companies are forecast to face tough challenges next year.

It is even questionable how Kumho Industrial will survive considering the slump in the construction industry. The company reported a 15.3 billion won operating loss for the first half of 2015, turning into the red from 2014’s 15.9 billion won operating profit. The company has pinned its hopes on overseas markets, mainly in Southeast Asia including Vietnam and the Philippines. The company said only 11.2 percent of its revenues were made overseas in the first half, and it aims to improve that figure starting next year.

Another worry is Asiana Airlines, which is expected to carry out a restructuring program after reporting about 150 billion won in losses from June to August, mainly due to the outbreak of Middle East respiratory syndrome.

BY KWON SANG-SOO [kwon.sangsoo@joongang.co.kr]