Kumho Industrial sells $812m in assets to Korean PE fund

As part of the transaction, Kumho will invest KRW150 billion in the fund, taking a 30% stake, Reuters reported. This will enable it to take a share of the profits when the assets are exited.

The conglomerate said last November that it was looking to divest KRW1 trillion worth of assets to approximately 10 private equity funds. Parent company Kumho Asiana is one of a number of second- and third-tier South Korean chaebols under pressure from domestic banks to offload non-core assets in order to settle their debts.

Kumho's problems can be traced back to the highly leveraged KRW6.4 trillion (then $5.6 billion) purchase of Daewoo Engineering & Construction in 2006. It sold a majority stake to Korea Development Bank (KDB) for KRW2.9 trillion (then $2.5 billion) in December 2009. Reports at the time noted that the bank would buy 50% of the company plus one share through its private equity investment vehicle.

KDB and other creditors placed Kumho Industrial into a debt restructuring program in late 2009 and directly acquired it several months later. Kumho Asiana also sold off Kumho Rent-A-Car to MBK Partners and Korea Telecom for KRW300 billion last year, and Kumho Life Insurance was offloaded to a fund backed by KDB.

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• Topics
• North Asia
• Restructuring
• Credit/Special Situations
• South Korea
• Distress