Kia executives asked to resign
Kia executives asked to resign
SEOUL (Reuter): Creditors of South Korea's embattled Kia
Group have demanded that executives of the eighth-ranked group
resign and that its commercial vehicle unit be sold, a Korea
First Bank official said yesterday.
"If Kia wants to get emergency loans, it should turn over a
memorandum promising the management's unconditional resignation
before Friday," said Lee Ho-keun, director of the credit division
of Korea First Bank, Kia's main creditor.
Another creditors' meeting was set for Friday, Lee told a news
conference.
Creditors postponed a final bail-out decision, saying Kia
officials were not sufficiently prepared to discuss the group's
self-rescue plans at Wednesday's meeting, Lee said.
In a desperate move to satisfy creditors, the Kia Group
announced harsher self-rescue measures minutes before the meeting
began.
The group said it would reduce the number of its domestic
affiliates to five from the current 28 through sell-offs, mergers
and spin-offs.
Asia Motors Corp would sell off part of its assets and be
absorbed by group flagship Kia Motors Corp to become one of Kia's
assembly plants, Kia said.
The group said it would reduce its workforce to a total of
51,502 by the end of this year from 60,337 at present, and
further to 44,000.
But Lee said creditors worried that Kia's plan to have Kia
Motors absorb Asia Motors could worsen the financial status of
Kia Motors.
Creditors also demanded that Kia undertake even deeper
workforce reductions and sell more real estate, Lee said.
Korea First Bank said its proposed bail-out package of
emergency loans totaling 183.1 billion won (US$205.3 million) for
four Kia units had been discussed at Wednesday's meeting.
The proposal included 60.7 billion won for group flagship Kia
Motors Corp, 76.6 billion for Asia Motors Corp, 25.0 billion for
Kia Steel Co and 20.8 billion for Kisan Co.
Kia Group had requested emergency loans of 515.9 billion won,
the bank said, which included 175.0 billion won for Kia Motors
and 131.7 billion for Asia Motors.
Analysts were unimpressed by Kia's latest offer.
"Kia still wants to keep its managerial rights and Asia
Motors. That would be unacceptable to creditors," said Kang Hoon-
suk, analyst at ING Barings Securities.
"Kia may gain a reprieve of several months from Friday's
meeting, but, ultimately, a takeover by a third party will be the
most likely solution to the Kia crisis," he said.
South Korea's leading newspaper Chosun Ilbo said yesterday the
nation's largest carmaker Hyundai Motor and unlisted Daewoo were
discussing a plan to jointly take over Kia and had agreed in
principle to the deal.
The two automakers officially denied that such an agreement
had been made, but some officials of the companies and analysts
said Kia would probably end up in the hands of one or two of the
nation's top conglomerates.
Officials at Hyundai and Daewoo said Daewoo Group chairman Kim
Woo-choong and Hyundai Motor's honorary chairman Chung Se-yung
had met last week and possibly discussed the issue.
"We hope Kia's self rescue plan will succeed. But we can think
of other options if it fails," Hyundai Motor spokesman Lee Young-
bok said.
"A third party solution makes economic sense. That will please
the financial community and political circles," said Kim Byung-
joon, analyst at Dongwon Economic Research Institute.
The Samsung Group, despite its denial, must be interested in
taking over Kia Motors, analysts said.
"Samsung's takeover scenario looks like the best solution
because it will most effectively ease concerns about serious
over-capacity in South Korea's auto industry," said an analyst at
a foreign securities house who asked not to be identified.