Kumho Asiana Group said Thursday it will give up the management rights of its tire unit if the airline-to-construction conglomerate fails to restructure the financially troubled unit by March.
The group said in a statement that it will also give up its right to buy back Kumho Tire Co. from a third party.
The announcement comes after Kumho Tire's creditors raised a question about the "details-deficient" self-rescue plan submitted Tuesday by the tiremaker to its creditors, who are led by the state-run Korea Development Bank.
In March, China's Qingdao Doublestar signed a 955 billion won (US$843 million) contract with the creditors to buy a 42.01 percent stake in Kumho Tire.
However, the deal collapsed as the creditors rejected Doublestar's demand to cut the price, citing the South Korean firm's weak earnings.
In the January-June period, Kumho Tire's net losses deepened to 108 billion won from 22 billion won a year earlier. At the end of June, it owed a total of 2.74 trillion won to financial institutions.
In the self-rescue measures, the tiremaker said it will raise about 200 billion won by selling new stocks this year and will raise funds by selling its loss-making plants in China by March.
Kumho Tire said the sale of its assets in China could fetch up to 400 billion won, but it didn't provide further details on its self-rescue program.
The tiremaker could reportedly raise a total of 630 billion won by issuing new shares, selling assets in China and selling a stake in Daewoo Engineering & Construction Co.
Hwi Won firstname.lastname@example.org
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