By Oliver Hall
Kumho tyres has reportedly delayed December salary payments to its its staff, claiming a temporary cash shortage, according to news reports.
The tyres company blamed the problem on the fact that it was making a large debt payment at the end of the year, resulting in a short-term cash crisis.
However, news of the salary delay sent shares in the tyres company tumbling by 12.7 per cent.
“The delayed salaries worth about $9 million will be paid to all employees in early January, when the company will receive payments from its clients,” a company spokesman told South Korean media.
The move, though, has caused concern among investment analysts about the liquidity of Kumho Asiana Group, the tyre company’s parent.
Kumho Asiana faces a large payment connected to its Daewoo Engineering & Construction Co. unit and has reportedly had trouble raising money and has resorted to selling stakes in the construction company and other subsidiaries.
“If the parent group’s process to sell the construction unit suffers a delay next year, it may make Kumho Tyre’s liquidity condition worse,” an analyst told financial media.