Park officially steps down as leader of Kumho Tire

Park Sam-koo

Park Sam-koo, chairman of the Kumho Asiana Group, officially stepped down from management of Kumho Tire, leaving the fate of the beleaguered tire company in the hands of its creditors.

In a statement released by Kumho Asiana on Thursday, Park said he decided to “humbly accept the decision of the creditors” and “resign from the management of Kumho Tire and forgo his right to first refusal” to reacquire control of the company.

Sohn Bong-young, a senior executive vice president of Kumho Tire, took over the reins as interim chief executive.

“It would be impossible for Kumho and chairman Park to buy back Kumho Tire given their current condition,” said Lee Dong-geol, chairman of the state-run Korea Development Bank in a press conference on Friday at the bank headquarters in Yeouido, western Seoul. Lee and executives of the state-run bank discussed the restructuring plans of the creditors with local reporters at the briefing. The KDB is Kumho Tire’s biggest creditor.

Lee explained that creditors of the tire company, which include KB Kookmin Bank and the Export and Import Bank of Korea, unanimously agreed on voluntary restructuring.

A voluntary restructuring agreement is a concession made by creditors of a company to voluntarily provide support instead of having the company undergo a debt-restructuring program by a local court. This makes it easier for creditors to postpone due dates on loans and inject liquidity when necessary.

Park finally threw in the towel after months of struggle to regain ownership of the tire company, which his group lost control of in 2009. Kumho Tire filed for a workout program due to a severe liquidity crunch and the creditors of the company delegated the management of the tire company to chairman Park in 2010 when the workout program began. The company finally graduated from the program in 2014, although it continues to struggle to stay afloat.

After Doublestar, a Chinese tire company that was the preferred bidder to buy Kumho Tire, dropped its bid earlier this month, Park submitted a turnaround plan to the group of creditors. The creditors deemed Park’s plan, which included raising some 600 billion won ($524.9 million), improbable and turned it down.

Chairman Lee explained that Kumho Tire shouldn’t face an immediate liquidity problem if the creditors decide to extend the due date on 1.3 trillion won in debt that Kumho Tire has to pay back. Creditors had already pushed back the date on the debt, which was initially due in June this year. Lee said creditors will try to maintain as many jobs as possible during the restructuring process.

BY CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]