SEOUL, South Korea (Dec. 30, 2009)—Kumho Tire Co. Inc. has entered into a “work-out” procedure with creditors to address short-term financial difficulties.
The “work-out” is a procedure practiced in South Korea that doesn't involve the court system, Kumho said, whereby the company and creditors work together to address their issues. The method is permitted for companies that are presumed to have a high possibility of business normalization but have suffered temporary difficulties in repaying loans to financial institutions.
The financial difficulties relate to the acquisition in 2006 by Kumho's parent, Kumho Asiana, of Daewoo Engineering & Construction Co., which involved Kumho Tire as an investor.
Kumho Asiana has been trying to sell Daewoo, but has not been able to find a buyer in the current down economy. As a result, Kumho Asiana has suffered capital losses.
Kumho Tires' overseas entities aren't involved in the procedure, meaning Rancho Cucamonga, Calif.-based Kumho Tire U.S.A. will continue as usual.