Kumho Industrial sells off stake in Daewoo Engineering

SEOUL, July 26 (Yonhap) -- Kumho Industrial Co., the construction arm of Kumho Asiana Group, said Tuesday that it sold part of its stake in Daewoo Engineering & Construction Co. for 273 billion won (US$259.7 million) in an effort to help improve the group's financial profile.
Kumho Industrial said that it disposed of 20 million shares in Daewoo Engineering before the market opened at 9 a.m., bringing down its stake to 9.8 percent from 14.6 percent. The sale price was set at the Monday's close of 13,650 won per share.
Shares of Daewoo Engineering closed at 12,650 won on the main bourse, down 7.33 percent from the previous session.
"This is aimed at carrying out a debt restructuring plan ordered by creditors and improving financial health by repaying debt," said Kumho Industrial.
Cash-strapped Kumho Asiana said no detailed schedules have been set to sell off the remaining stake. Analysts, however, say that Kumho Industrial will soon dump the stake to follow up on a creditor-led debt reduction plan. Korea Development Bank is the main creditor of Kumho Asiana.
Kumho Industrial is widely estimated to have raised 550 billion won from the sale of its total stake in Daewoo Engineering, the fourth-largest builder in South Korea.
Kumho Industrial said it is also considering selling its five business divisions, including its express bus unit and Seoul express bus terminal, in package deals.
Kumho Asiana said that it will decide the details of the asset sales after holding discussions with creditors soon.
Kumho Asiana's two subsidiaries -- Kumho Tire and Kumho Industrial -- have been put under a debt restructuring program since early 2010 due to a severe cash crunch sparked by the group's purchase of Daewoo Engineering in 2006.
Shares of Kumho Industrial rose 6.8 percent to 9,900 won on Tuesday.