Kumho Tire resumes plan to build US plant

Kumho Tire, Korea's second-largest tiremaker, said Monday it has resumed its plan to open a production plant in the United States that has been suspended for six years.

In 2008, Kumho set out to invest US$165 million to build a plant in Georgia that can churn out 2.1 million tires annually, but it called off the plan when the company went into a debt workout program the following year.

"A formal request for funds has been made to creditors, so we need to wait for the results," a Kumho official said. He hinted that the process can take time, not going into details.

Industry sources said earlier that the tiremaker asked its banks, such as Korea Development Bank (KDB), to approve a loan for the building of the Georgia plant, and that lenders held a meeting last week to check the feasibility of the endeavor. Sources added that one of the main points of discussion was how to come up with the necessary funds if the loan is approved.

The company reported operating losses of 119.6 billion won ($117.3 million) in 2009, but it turned a profit in 2010 and has been able to generate operating profits since then. This has allowed the size of the company's outstanding debt to shrink to 2.6 trillion won late last year from 3.1 trillion won in 2009.

The tiremaker has original equipment supplier deals with Chrysler, Daimler-Benz and Volkswagen. It said that based on its rising brand equity, that it wants to expand into the global tire replacement equipment market.