Bankrupt Kia Group to Sell Half Its Subsidiaries

SEOUL, South Korea -- The financially troubled Kia Group, South Korea's eighth largest conglomerate, said Wednesday it will sell half of its 28 subsidiaries as part of efforts to cope with its cash crunch.


The conglomerate, which owns the nation's second largest car company, also said it plans to sell 1.9 trillion won ($2.1 billion) worth of buildings and real estate to help ease its cash flow problems.


The decision came a day after creditor banks said the conglomerate was on the verge of going bankrupt. The banks put Kia under two months of financial protection after it failed to honor maturing debts.


The development especially worried 8,000 suppliers of Kia Motors Corp., which has large investments at home and abroad. Those suppliers could face insolvency if Kia's problems are prolonged.


The Finance and Economy Ministry promised cheap loans to help Kia subcontractors strained for cash.


Kim In-ho, senior economic adviser to President Kim Young-sam, said the government will ensure that Kia's cash flow problems will not affect its 10 overseas projects, including its $500 million investment in Indonesia's "National Car'' program. Kia has also opened a production facility in Russia's Kaliningrad region to produce cars.