The financial plight of the Kumho Asiana Group is deepening as creditors defer liquidity provision while devising a turnaround plan for two of its affiliates.
Kumho Tire could not pay wages to its employees for a second straight month, while Kumho Industrial became the second affiliate to announce it would be unable to send out salaries.
“Cash flow is still not smooth as due diligence by creditors goes into a second week,” said an official at Kumho Tire, who asked not to be identified. “We have requested an emergency loan [from creditors], but are not sure whether we will be able to get it.”
An official at Kumho Industrial cited the same reason for the failed wage payments.
The cash-strapped Kumho Group, which was the eighth-largest local conglomerate by assets as of the end of 2008, decided to put the two affiliates under debt rescheduling programs, which were approved by their creditors earlier this month. An extremely costly purchase of Daewoo Engineering & Construction, combined with the global financial crisis, has forced the group into a knee-deep liquidity crunch.
The Kumho Tire official said the due diligence by its creditors, led by Korea Development Bank, would likely take four to six more weeks. Kumho Industrial, whose main creditor Woori Bank is conducting due diligence, also asked for an emergency loan, the Kumho Industrial official said. Last week, the group reduced the number of its executives by 30%.
