Waiting for banks to bite the bullet
While the Kia debt moratorium has until September 29 to produce the goods, early signs are not that encouraging. After initially maintaining a public friendliness, Kia and its creditors were soon locked in an extraordinary stand-off that seems to highlight the need for an intermediary.
Speaking in late July before the first substantive talks between Kia and its banks on a rescue plan had started, one senior securities company executive predicted: "Banks that mismanaged their credit and asset-allocation programmes will scramble to find a scapegoat. They will be very busy trying to cover things up."
The public slanging match between Korea First Bank and Kia group chairman Kim Sun-hong and his management team seems to bear this out. Most at issue is Kim's own role, with the chairman and his fellow directors only willing to step down after they have put the group back on track their own way.
In return for new loans, Kia's creditors have demanded the dismissal of its senior management; the sale of its commercial vehicle unit, Asia Motors; and written agreement from Kia's unions that they will support plans to lay off 8,800 workers by the end of this year.