Kumho Tire Creditors rejects acquisition proposal

Kumho Tire creditors will most likely disapprove Kumho Asiana Group Chairman Park Sam-koo’s request to form a consortium to finance his acquisition of the tire maker, according to media reports on March 22. 

“After injecting funds and normalizing efforts over the past two years, the Kumho Tire sale is almost nearing completion,” an official with the creditors was quoted by Chosun Biz. “We cannot change the original principal at the end due to growing public sentiments.”

The Korea Development Bank was to make a decision on March 22 whether to allow Park to form a consortium to purchase Kumho Tire. But the process was delayed amid growing political pressure that called on the creditors to reconsider selling the nation’s No. 2 tire maker to a Chinese firm, as well as dealing with legal issues. 

The KDB plans to announce the decision on March 24 or next week at the latest, after asking seven other lenders to cast a vote on the matter. 

Among the lenders, Woori Bank holds 33.7 percent voting rights, followed by the KDB with 32.2 percent, KB Kookmin Bank with 9.9 percent and the Export-Import Bank of Korea with 7.4 percent. In order for Park’s consortium proposal to be approved, he needs more than 75 percent approval, which means that KDB and Woori Bank have to OK the request. 

But industry sources say the creditors are most likely to object to Park’s request and stick to their previous stance, despite political pressure. 

Earlier this week, major presidential candidates called on creditors to reconsider the Kumho Tire bid, asserting the Chinese firm would end up firing local employees, as well as leak the technology overseas, in an attempt to woo voters in the region where Kumho Tire is headquartered. 

In response, Chinese tire maker Doublestar released an official statement confirming there would be no layoffs after its planned acquisition of Kumho Tire. 

On March 13, Doublestar entered into a stock trade agreement with creditors to take over a controlling 42.01 percent stake in Kumho Tire for 955 billion won (US$850.23 million). 

Park, who was granted the rights of first refusal in the bid, has to make decision by April 12 whether he will practice his rights by paying more than Doublestar or drop out from the bid. 

The chief, however, has said he would give up his buyback option if he is not allowed to form a consortium. 

He further threatened to take legal action against the KDB for not discussing the consortium issue with other creditors before striking a deal with Doublestar.