April 26, 2024

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[THE INVESTOR] Kumho Asiana Group Chairman Park Sam-koo has secured enough cash to acquire Kumho Tire from the hands of its creditors, speeding up his efforts to rebuild his family-controlled conglomerate.

According to industry sources on Feb. 9, Park has raised 1 trillion won (US$871.59 million) by setting up a wholly owned special purpose company to attract funds from a strategic investor and multiple financial investors for the purchase. 

Kumho Asiana Group Chairman Park Sam-koo

With the raised amount, the chief will be able to outmatch Qingdao Doublestar, a Chinese tire maker that has been selected as the preferred bidder for acquiring a controlling stake in Kumho Tire.

Doublestar reportedly offered between 900 billion won to 1 trillion won to take over a 42.1 percent stake in South Korea’s second-largest tire maker, according to sources at the Korea Development Bank, its main creditor.

Park, who has the right of first refusal in the sell-off, could repurchase the stake if he pays more than Doublestar’s offer.

The creditors and Doublestar are currently negotiating price requirements and operational plans for Kumho Tire, with plans to sign the stock purchase agreement by end of this month.

Once the price is set, the creditors will notify Park of the deal details, and he has a month to decide on buying back the firm by offering a higher price.

Park was granted a buyback option when the creditors took over Kumho Tire’s stake in a debt-to-equity swap in 2010, due to the liquidity crisis amid the group’s excessive business expansion.

The chief has expressed firm intentions of buying back the tire unit multiple times, but deal watchers had previously questioned his ability to finance the purchase.

But with secured funds, Park will most likely practice the buyback right to push his ambitious plan of rebuilding the 70-year-old conglomerate that was torn apart amid the liquidity crisis.

By Ahn Sung-mi (sahn@heraldcorp.com)