Kumho Tire creditors reject self-rescue plan

Creditors of Kumho Tire rejected the cash-strapped tire maker’s self-rescue plan Tuesday, demanding it propose more drastic measures to bolster its sales and improve its financial health.

Hours after Kumho Asiana Group submitted the 730 million won ($646 million) restructuring package, the state-run Korea Development Bank (KDB) and other creditors dismissed the package, calling it “insufficient.”

According to creditors, Kumho Asiana Group Chairman Park Sam-koo proposed to secure 330 billion won through issuing new stock while selling off shares of the group’s construction affiliate. Taking account of Park’s other plan to sell off Kumho Tire’s production plants in China, the total self-rescue plan for the beleaguered tire maker is expected to deliver up to 730 billion won.

Of the 330 billion won, Park said in the plan that he will secure 200 billion by issuing new stock while delivering the remaining 130 billion won by selling off 4.4 percent of Daewoo Engineering & Construction shares.

Considering Korea’s second-largest tire maker’s local debt of 316 million won in China scheduled to mature soon this year, however, the actual volume of the self-rescue plan for Kumho Tire is expected to need 414 billion won in financing.

Park said Tuesday he will “fully cooperate with creditors in successfully submitting the self-rescue plan” but failed to satisfy them.