Korean carmakers move to help ailing Kia<\/p>\n
SEOUL (Reuter): South Korea's two largest carmakers agreed
\nyesterday to inject cash into a core unit of the Kia Group in a
\nmove which officials of the troubled conglomerate called a major
\nbreakthrough.<\/p>\n
A Kia statement said Hyundai Motor Co, the country's largest
\ncarmaker, and unlisted Daewoo Motor Co agreed in principle to buy
\nstakes in Kia Steel Co, which makes speciality steel used to make
\ncars.<\/p>\n
In a hastily arranged meeting yesterday, Hyundai Motor
\nhonorary chairman Chung Se-yung, Daewoo Group chairman Kim Woo-
\nchoong and Kia Group chairman Kim Sun-hong agreed that their
\ncompanies would form a consortium to save Kia Steel.<\/p>\n
"The three chairmen agreed on measures to save Kia Steel,
\nwhich holds the key for the Kia Group to overcome its management
\ncrisis," said Kia spokesman Jeun Sang-jin.<\/p>\n
"This is a major breakthrough and could provide a turning
\npoint for our group," he told Reuters by telephone.<\/p>\n
The agreement by the three tycoons came on the eve of a
\ncrucial meeting of Kia creditors to discuss steps on the fate of
\nthe embattled conglomerate.<\/p>\n
Kia Group's creditors have selected 18 of the group's 38
\naffiliates for bail-out under a scheme they forged voluntarily in
\nApril to prevent major companies from folding. Kia Steel is one
\nof the 18.<\/p>\n
The Kia Group, South Korea's eighth largest conglomerate, has
\nrun into financial problems because of local sales slump suffered
\nby its flagship Kia Motors Corp and its commercial vehicle unit
\nAsia Motors Co.<\/p>\n
Under the agreement reached yesterday, Hyundai Motor, Daewoo
\nMotor and Kia Motors would form a consortium to run Kia Steel.
\nThe three carmakers will have equal stakes in Kia Steel.<\/p>\n
The Kia statement said the three automakers agreed to start
\nworking-level negotiations to work out details of the consortium.<\/p>\n
On Wednesday, Kia creditors failed to produce a detailed
\nbailout plan as they ruled that the group's self-rescue plans
\nwere not sufficient.<\/p>\n
The creditors, who demanded that Kia executives resign and
\nthat Asia Motors be sold, are due to try again on Friday.<\/p>\n
Yesterday's surprise announcement by the three tycoons
\nfollowed a local newspaper report that Hyundai Motor and Daewoo
\nwere discussing a plan to jointly take over Kia Motors and had
\nagreed in principle 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.
\nOther analysts disagreed.<\/p>\n
"Today's deal for Kia Steel is needed to secure supply of
\nspeciality steel products for Hyundai and Daewoo. I think it is
\nrash to link it to the takeover of Kia Motors," said Chang
\nChoong-rynn, motor analyst at Daewoo Securities.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/korean-carmakers-move-to-help-ailing-kia-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}