S. Korea’s conglomerate Kumho Asiana Group again draws attention on the management of its affiliates including Kumho Industrial, Asiana Airlines and Korea Express as Kumho Petrochemical and Kumho Tyre go under the separate management.
The cash-starved group’s creditors said that they would not guarantee Kumho founding family’s control of its management, apart from the energy company and tyre firm. The possibility, however, to see the nation’s eighth largest business return to hands of the family members once the group is stabilized.
In particular, Park Chul-wan, the director of strategic management division of Kumho group, purportedly shows interest in managing the distribution subsidiaries including the airliner and logistics company.
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Some analysts criticize that Korean economy might be under the pressure when the affiliates of Kumho Asiana Group come out for sale in the merger and acquisition market.
◆ Second round of sibling feud over Kumho Asiana
Kumho Asiana Group witnessed territorial change in governance structure of affiliates after the group’s owners agreed with creditors to offer their stakes in group units as collateral in return for fresh loans.
The agreement also included the separate management over affiliates; Park Sam-koo, honorary chairman of the group, will co-run Kumho Tyre with his son; Park Chan-koo, former chief of the group’s chemical division, will manage Korea Kumho Petrochemical with Chul-wan.
Other affiliates including Kumho Industrial, Asiana Airlines, and Korea Express are going to be led by a professional manager whom Sam-koo gives a recommendation to along with agreement by lenders.
It means that Kumho Asiana Group will not be managed by descendants of the late group founder Park In-cheon. Sam-koo and Chan-koo are the third and fourth sons of the late founder.
Creditors already said to withdraw a guarantee to rights which allow them to repurchase shares of Kumho Industrial.
“Owners’ shares in Kumho Industrial are going to be reduced by the various methods such as investment conversion,” one creditor representative said.
The lenders are going to sell out the company after normalizing its management, he said.
The list of companies for sale also includes some affiliates in distribution industry including Asiana Airlines and Korea Express along with Kumho Industrial.
Speculation, however, has surfaced that members of founding family are likely to recoup the management rights on Asiana Airlines, the symbol of Kumho Asiana Group.
Especially, it is said that Cheol-wan continued to express his attention on Asiana Airline and Korea Express.
“It is widely known that Cheol-won kept demanding taking over control of Asiana Airlines,” said a person familiar with this matter.
There might be a chance for Cheol-won to enter into negotiation with creditors because he holds 11.96 percent stock of the group’s defacto holding firm Kumho Petrochemical.
His movement might extend the siblings feud for Kumho Asiana to their offspring including Park Se-chang, a son of Sam-koo, and Park Jun-kyung, son of Chan-koo.
“There is a high possibility that the owners try to reclaim the management rights for the subsidiaries with symbolic meaning for the group once things start to calm down,” claimed an official at the group.
◆ Pressure on Korean Economy
Lenders and financial investors still have not been able to point out the direction for sale of Daewoo Engineering, which Kumho group once purchased and then place back to the market on sale.
The local M&A market is already saturated with companies for sale including semiconductor maker Hynix and Daewoo Shipbuilding and Marine Engineering.
Experts say that the selling process is now in deadlock because there are too many mega corporations looking for new owners in the market.
“As you can see from the case of Hynix, mega corporations to sell receive tepid attraction from investors because there are just too many companies for sale out on the market,” said an analyst of Securities Company.
If the creditors send all three affiliates including Kumho Industrial, Asiana Airlines and Korea Express for sale out to the market, the M&A market in the country is highly likely to face too many sellers and too few buyers.
“The fact is that the social cost is too high to buy the mega corporate and this might give too much pressure on Korean economy,” said a representative of creditors.
By Lee, Jaeho
Translated by Shin, Kirim
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