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.