Kumho Asiana Group, through its Kumho Tire USA Corp. subsidiary, issued a statement late today regarding its financial position.

It had been widely reported that cash strapped Kumho Asiana Group and its creditors agreed to a debt restructuring program, under which Kumho Asiana would sell a controlling stake in its Daewoo Engineering & Construction Co. to a private equity fund led by Korea Development Bank for $2.5 billion.

In addition, it would also sell off its auto rental business for some $260 million, sell its insurance unit for an undisclosed sum, and restructure the debt of its Kumho Tire and Kumho Industrial operations.

The company’s statement reads:

“Kumho Tire Co. headquartered in Seoul, South Korea, has announced the company has entered into a ‘work-out’ procedure with creditors. The work-out is a unique procedure with creditors that does not involve the court system, whereby the company and creditors work together to address short term financial difficulties.

“The work-out procedure is permitted to companies that are presumed to have a high possibility of business normalization but have suffered temporary difficulties in repaying loans to financial institutions. Many leading companies in Korea have previously experienced a work-out.

“Kumho Tire Co. partially took part in the Kumho Asiana’s acquisition of the Daewoo Engineering & Construction Co. in 2006. With the economic downturn, the company has suffered capital losses due to the decrease in share price as well as collection of proceeds due to the delayed sell-off of the Daewoo unit.

“Additionally, the global economic downturn and accumulated deficit in the past few years led to poor financial structure and liquidity shortage.

“We have concluded that for faster business normalization, the requested work-out is the best measure for our business partners and stakeholders.   

“Kumho Tires’ overseas entities are not subject to the work-out. Kumho Tire USA operations will continue as usual during the work-out period.”