[THE INVESTOR] Korean tire maker Tire Bank has announced its bid to acquire Kumho Tire.
“We felt a deep sense of sorrow seeing that Kumho Tire may be sold off to a Chinese firm,” said Kim Jeong-gyu, chairman of Tire Bank, in a press conference at 10 a.m. on March 27. “As a fellow Korean company, we could not stand by doing nothing.”
He added, however, that Tire Bank would make a final decision after listening to the unions of both companies, Kumho Tire’s creditors and the public.
Established in 2003, Tire Bank is a family-owned business running 400 outlets across Korea. As of 2016, the company had sales of 372.9 billion won (US$343.90 million) and operating profit of 66.4 billion won. But its liquid assets were only around 1.91 billion won, triggering doubts as to whether Tire Bank has the ability to attain Kumho Tire, which is strapped under debt of more than 3 trillion won.
One option, according to industry watchers, would be for Tire Bank to find a strategic partner.
So far, state-run Korea Development Bank -- the main creditor of Kumho Tire -- has yet to comment, saying only that it would not condone “abnormal methods” for getting the tire maker back on track to signal that it’s still opting for Qingdao Doublestar as the main bidder.
The Chinese tire company has signed on for a capital increase worth 600 billion won for Kumho Tire, but the Korean firm’s union has been refusing the deal.
On March 25, Kumho Tire’s union told the press that a Korean company was looking to bid.
Enraged and surprised by the announcement, KDB chief Lee Dong-gul held a press conference a day later, calling for Kumho Tire to uphold the agreement the two sides tentatively reached last week, under which the tire maker reportedly promised to accept Doublestar’s investment and work toward a speedy normalization.
Both KDB and Kumho Tire are under fire for “mishandling” the latter’s restructuring.
Meanwhile, Kumho Tire’s creditors say the company should preferably reach a conclusion on its restructuring by March 30 in order to avoid court receivership.
By Song Seung-hyun (firstname.lastname@example.org)