April 27, 2024

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[THE INVESTOR] Kumho Asiana Group Chairman Park Sam-koo on March 28 condemned Kumho Tire's creditors for attaching conditions to reconsider Park’s consortium request.

The state-run Korea Development Bank -- one of main lenders -- said the creditors voted down the request to allow Park to form a consortium to acquire a controlling stake of Kumho Tire. But it agreed to reexamine the consortium proposal if Park submits “detailed and valid” financing plans by April 13. 

Kumho Asiana Group Chairman Park Sam-koo

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Immediately after the announcement, Kumho Asiana released a statement saying the decision is “self-contradictory” and “not worth consideration.”

“Rejecting the consortium at first, while reconsidering the proposal if (Park submits) the financing plan contradicts itself,” Kumho Asiana said.

According to a Kumho official, without the creditors’ approval on the consortium, it is impossible to gather strategic investors to raise funds, adding the stalled consortium negotiations are back to square one.

The KDB had said it will put the consortium motion to a vote last week, 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.

According to industry watchers, Park will likely take legal action against the creditors for not discussing the consortium issue with other creditors in the first place before striking a deal with Qingdao Doublestar, indicating it will take a while for the sale of Kumho Tire to be finalized.

On March 13, Chinese tire maker 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$858.62 million).

Park, who was granted the rights of first refusal in the bid, has to make a 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, and requested the KDB to OK the consortium proposal.

Park has been backed by major presidential candidates, including the front-runner Moon Jae-in, who asserted that selling a top Korean tire maker to a Chinese firm would result in job losses and leak of technology.

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