Natural rubber exporters in Thailand will ship out cargoes to South Korea's Kumho Tire Co. only if banks provide a guarantee of credit, trading executives said Monday.
Shares of Kumho were suspended Monday following rumours of a debt default, but main creditor Korea Development Bank refuted this, saying its debts have been frozen as part of a debt workout program.
"We will ship out cargoes (to Kumho) only if they can open a line of credit," said Pongsak Kerdvongbundit, managing director of Von Bundit Ltd., one of Thailand's biggest producers of natural rubber.
He added once a line is opened, the bank concerned has to guarantee payment for the natural rubber cargoes.
Pongsak refused to divulge the volume of natural rubber his company supplies to Kumho, saying "it is part of a confidential deal."
Natural rubber sales to Kumho may be affected due to a debt workout but it isn't immediately clear whether Kumho's tire manufacturing operations in China will be impacted, he added.
It needs to be known if the issues are limited to Kumho in South Korea or extend to China, Pongsak noted.
Trading executives said large tire manufacturing companies such as Kumho have long-term contracts with raw material suppliers, which may be reviewed in this particular case.
"Of course there will be an impact on sales to Kumho but so far people are just talking about the debt-related problems (in Kumho). We haven't received any (information) from the buyer," said a senior executive at Thai Hua Rubber, a major natural rubber exporter to tire companies.
He said Thai Hua has a six-month contract with Kumho,due to expire in March, under which all supplies will be conditional to the opening of a line of credit by banks on the buyer's behalf.
If Kumho's debt-related problems are serious, suppliers may not seek to continue long-term contracts with the company, he added.
There are no Von Bundit rubber shipments for Kumho pending soon, said Pongsak.
(Source: irco.biz)
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