April 20, 2024

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[THE INVESTOR] Chinese tire maker Qingdao Doublestar, which has been selected as the preferred bidder for acquiring a controlling stake in Kumho Tire, will clinch the deal with the creditors this week, with the final price set at 955 billion won (US$826.19 million), according to media reports on March 7.

The creditors, led by state-run Korea Development Bank, are planning to enter into a stock purchase agreement with Qingdao Doublestar by March 10-13. 

Qingdao Doublestar placed its bid to acquire 42.01 percent stake, or 66.36 million shares, of the nation’s second largest tire maker. It bid 14,389 won per share, a value around 80 percent higher than the firm’s current stock price of 8,090 won.

The Chinese firm has three months to close the deal.

However, the purchase could all be preempted by Kumho Asiana Chairman Park Sam-koo who has the right of first refusal in the sell-off that allows him to repurchase the stake if he offers more.

The creditors will notify Park of the deal details within three days after the agreement.

If Park decides to practice his rights, he is required to make a 95.5 billion won down payment upfront, 10 percent of the deal value, within 30 days.

He also needs to come up with a financing plan for the rest of the amount.

The deal will hang on whether the Kumho Asiana Group chief will be able to make the payment. Park has claimed that he has raised 1 trillion won from financial investors and strategic investors to buy back the company.

But without disclosing the exact source of the funds, industry watchers are questioning his ability to outmatch Qingdao Doublestar. Park is said to be short to be on cash as he already spent 723 billion won last year to buy back another affiliate Kumho Industrial.

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