Creditors of Korea Kumho Petrochemical Co. are pressing the company to sell its stake in Asiana Airlines Inc., a major affiliate of Kumho Asiana Group, in order to separate the petrochemical firm from the group, industry sources said Monday.
Park Chan-koo, chairman of Kumho Petrochemical, has been seeking to separate the company and two other petrochemical units from Kumho Asiana Group, owned by his elder brother Sam-koo, following a management feud between the two brothers in 2009.
"We demanded that Kumho Petrochemical dispose of some 14 million shares in Asiana Airlines to meet conditions of separation from Kumho Asiana Group," said an official at the Korea Development Bank, the main creditor of Kumho Petrochemical.
Kumho Petrochemical has a 7.72 percent stake in Asiana Airlines, the country's second largest air carrier.
Kumho Petrochemical, however, said that the creditors are demanding too much, arguing that it still has a considerable amount of time until it reports the separation to the Fair Trade Commission by March.
The company also claims that stock prices of Asiana Airlines have been sluggish recently and the sale of the stake will cause Kumho Petrochemical to incur losses. Asiana Airlines closed at 6,660 won on the Seoul bourse on Friday, nearly half its peak price of 12,200 won in July.
The elder Park also sold off his stake in Kumho Petrochemical for 400 billion won (US$348.9 million) in November.
If Kumho Petrochemical unloads shares of Asiana Airlines, it will spur the separation of Kumho Petrochemical from Kumho Asiana Group, which includes affiliates Asiana Airlines, Kumho Tire Co., Kumho Industrial Co. and Kumho Petrochemical.
The group has been dogged by a severe cash crunch since it bought Daewoo Engineering & Construction Co., then South Korea's top builder, in June 2006.
When the separation is complete, Kumho Asiana Group, once South Korea's ninth-largest conglomerate, will divide into two groups.
Park Sam-koo will lead Kumho Asiana Group with Asiana Airlines, Kumho Industrial, and Kumho Tire, while Kumho Petrochemical, Kumho Polychem Co. and Kumho Mitsui Chemicals Inc. will be under the control of Park Chan-koo.
Shares of Kumho Petrochemical traded at 174,000 won on the Seoul bourse as of 9:45 a.m. (Yonhap News)