A feud between brothers who formerly ran Kumho Group entered a fresh round with the younger brother trying to stop a merger that would hand over a lucrative affiliate to his elder sibling, corporate watchers said Friday.
Kumho Petrochemical, run by younger brother Park Chan-koo, recently made an official demand to stop the merger between Kumho Terminal and Kumho & Company, calling the deal a grave negligence.
Kumho Petrochemical chairman Park Chan-koo (left) and Park Sam-koo, chairman of Asiana Airlines’ parent company Kumho Asiana Group (Yonhap)
The company threatened legal action to stop the merger, according to those familiar with internal proceedings.
Kumho Petrochemical is the second-largest shareholder of Asiana Airlines who had sold its entire stake in Kumho Terminal to Kumho & Company, which is a special purpose company set up by older brother Park Sam-koo. Kumho Terminal operates passenger vehicle facilities and brings in high profits for the older brother's Kumho Asiana Group.
Park Chan-koo argues that the merger would turn Kumho Terminal into a cash cow to pay back the heavy debts owed by the SPC, including its cash holdings and business profits.
The younger Park claims that the SPC is saddled with some 627 billion won ($536.8 million) in debts, including 347 billion won his older brother used to take over Kumho Industrial, and 280 billion won in more loans to purchase Kumho Terminal that has to be paid back within a year. The terminal operator has more than 300 billion won in cashable assets and generates a yearly profit of approximately 10 billion won, according to the younger Park.
The Supreme Court in December last year officially ended any business links between the two brothers, the sons of the Kumho Group founder, determining that the business group run by them are entirely separate entities. Park Sam-koo had led Kumho Group, but his younger brother Chan-koo defied his aggressive business management, opposing mergers and acquisitions that later brought on financial trouble and ended up placing Kumho Industrial, the group's construction unit and holding company, under creditors'
control in 2009. The younger brother split away from the group, and Park Sam-koo bought back the controlling stake in Kumho Industrial last December.
Corporate watchers said Kumho Petrochemical, in demanding a stop to the merger, has warned it will file suits for negligence against the CEOs and other officials who planned and arranged the deal.
Asiana Airlines, the country's second-largest carrier, denied any legal problems in the merger.
"The sale of Kumho Terminal stakes was at Asiana Airlines' request as a means of restructuring for business normalization," an official at the carrier said of the deal. "It was carried out through a normal procedure and has no problems under the law."
Asiana reported a net loss of 81.5 billion won in 2015, a stark plummet from a profit of 63.5 billion won the year before. It has pledged to sell 400 billion won's worth of non-core assets to improve its financial standing. (Yonhap)