Kia executives asked to resign<\/p>\n
SEOUL (Reuter): Creditors of South Korea's embattled Kia
\nGroup have demanded that executives of the eighth-ranked group
\nresign and that its commercial vehicle unit be sold, a Korea
\nFirst Bank official said yesterday.<\/p>\n
\"If Kia wants to get emergency loans, it should turn over a
\nmemorandum promising the management's unconditional resignation
\nbefore Friday,\" said Lee Ho-keun, director of the credit division
\nof Korea First Bank, Kia's main creditor.<\/p>\n
Another creditors' meeting was set for Friday, Lee told a news
\nconference.<\/p>\n
Creditors postponed a final bail-out decision, saying Kia
\nofficials were not sufficiently prepared to discuss the group's
\nself-rescue plans at Wednesday's meeting, Lee said.<\/p>\n
In a desperate move to satisfy creditors, the Kia Group
\nannounced harsher self-rescue measures minutes before the meeting
\nbegan.<\/p>\n
The group said it would reduce the number of its domestic
\naffiliates to five from the current 28 through sell-offs, mergers
\nand spin-offs.<\/p>\n
Asia Motors Corp would sell off part of its assets and be
\nabsorbed by group flagship Kia Motors Corp to become one of Kia's
\nassembly plants, Kia said.<\/p>\n
The group said it would reduce its workforce to a total of
\n51,502 by the end of this year from 60,337 at present, and
\nfurther to 44,000.<\/p>\n
But Lee said creditors worried that Kia's plan to have Kia
\nMotors absorb Asia Motors could worsen the financial status of
\nKia Motors.<\/p>\n
Creditors also demanded that Kia undertake even deeper
\nworkforce reductions and sell more real estate, Lee said.<\/p>\n
Korea First Bank said its proposed bail-out package of
\nemergency loans totaling 183.1 billion won (US$205.3 million) for
\nfour Kia units had been discussed at Wednesday's meeting.<\/p>\n
The proposal included 60.7 billion won for group flagship Kia
\nMotors Corp, 76.6 billion for Asia Motors Corp, 25.0 billion for
\nKia Steel Co and 20.8 billion for Kisan Co.<\/p>\n
Kia Group had requested emergency loans of 515.9 billion won,
\nthe bank said, which included 175.0 billion won for Kia Motors
\nand 131.7 billion for Asia Motors.<\/p>\n
Analysts were unimpressed by Kia's latest offer.<\/p>\n
\"Kia still wants to keep its managerial rights and Asia
\nMotors. That would be unacceptable to creditors,\" said Kang Hoon-
\nsuk, analyst at ING Barings Securities.<\/p>\n
\"Kia may gain a reprieve of several months from Friday's
\nmeeting, but, ultimately, a takeover by a third party will be the
\nmost likely solution to the Kia crisis,\" he said.<\/p>\n
South Korea's leading newspaper Chosun Ilbo said yesterday the
\nnation's largest carmaker Hyundai Motor and unlisted Daewoo were
\ndiscussing a plan to jointly take over Kia and had agreed in
\nprinciple to the deal.<\/p>\n
The two automakers officially denied that such an agreement
\nhad been made, but some officials of the companies and analysts
\nsaid Kia would probably end up in the hands of one or two of the
\nnation's top conglomerates.<\/p>\n
Officials at Hyundai and Daewoo said Daewoo Group chairman Kim
\nWoo-choong and Hyundai Motor's honorary chairman Chung Se-yung
\nhad met last week and possibly discussed the issue.<\/p>\n
\"We hope Kia's self rescue plan will succeed. But we can think
\nof other options if it fails,\" Hyundai Motor spokesman Lee Young-
\nbok said.<\/p>\n
\"A third party solution makes economic sense. That will please
\nthe financial community and political circles,\" said Kim Byung-
\njoon, analyst at Dongwon Economic Research Institute.<\/p>\n
The Samsung Group, despite its denial, must be interested in
\ntaking over Kia Motors, analysts said.<\/p>\n
\"Samsung's takeover scenario looks like the best solution
\nbecause it will most effectively ease concerns about serious
\nover-capacity in South Korea's auto industry,\" said an analyst at
\na foreign securities house who asked not to be identified.<\/p>",
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