The state-run Korea Development Bank, main creditor of Kumho Tire
, on April 19 said it plans to resume its sale process with Chinese Qingdao Doublestar next week.
On the previous day, Kumho Asiana Group Chairman Park Sam-koo informed that he was dropping his bid to buy back the former tire-making affiliate from creditors.
The bank said that after the April 19 deadline passes, it will move forward with Doublestar to close the deal.
“We plan to notify Doublestar to close the deal on April 20, and by April 24 we expect to start negotiations to finalize it,” a KDB spokesperson told The Investor.
The KDB estimates it will take about five months to finalize the sale of a controlling 42.01 percent stake of Kumho Tire to the preferred bidder Doublestar. During the negotiations, the nine creditors and Doublestar will work on key issues, including the trademark usage, regulatory approvals and extending Kumho Tire’s outstanding loans.
The deal would mainly hang on whether Kumho Industrial -- who holds the trademark rights of the Kumho brand -- will allow Doublestar to use its logo after the acquisition. Doublestar has sought to to use the logo for a maximum of 20 years, but has got no response to the request.
Kumho Holdings owns a controlling stake of 46.1 percent in Kumho Industrial. Which means, Park, the chief of Kumho Holdings, could say no to the Kumho logo usage and possibly break the deal.
If the acquisition falls apart over the next five months, Doublestar could lose its priority bidder status and Park will get another chance to practice his buyback rights.
Earlier on March 13, Doublestar entered into a stock trade agreement with the creditors to take over a controlling stake in Kumho Tire for 955 billion won (US$837.62 million).
Park had until April 19 to decide if he will practice his preemptive rights by offering more than Doublestar, or drop from the bid. On April 18, he said he will not exercise his rights “for now,” calling the transaction “unjust and unfair,” blaming creditors for not allowing him to form a consortium to finance the deal.
By Ahn Sung-mi (firstname.lastname@example.org