[THE INVESTOR] Korea Development Bank, the main creditor of Kumho Tire, on Feb.22 denied reports that China’s Qingdao Doublestar has been finalized to acquire the tire maker after renegotiating a new deal.
Doublestar, which was chosen as the preferred bidder in January 2017, had pulled out of the deal in September last year after Kumho Tire’s creditors refused to cut the bidding price by 16 percent to 800 billion won (US$736 million). According to recent reports, its latest offer of 700 billion won for the 42 percent stake, along with a longer employment guarantee period of three years, won over the creditors.
“Nothing has been finalized,” said one KDB official. “Our goal is to save both the company and jobs.”
The market cap of Korea’s second-largest tire maker was 957 billion won as of Feb. 21. Shares of the company soared more than 10 percent to 6,830 won on the news before giving up some of its earlier gains.
Share prices ended at 6,210 won, up 1.14 percent.
Since the collapse of the deal last year, nine creditors led by the KDB have been discussing the debt-restructuring process while rolling over 1.3 trillion won debt to the end of January.
The government and creditors reportedly took into consideration the local economy, which is also suffering from other issues such as General Motors’ decision last week to shut down a factory in Gunsan, southwest Korea. Two of Kumho Tire’s factories are located in the vicinity.
The Korean firm reported on Feb. 9 that it has turned to red with 156.9 billion won operating loss last year. Revenue fell 2.4 percent on-year to 2.88 trillion won and net loss expanded to 88.6 billion won.
The tire maker, which earns about 22 percent of its sales from its North American operations, opened its first US plant with an annual capacity of 4 million units in Georgia in 2016. Its global annual capacity stands at 65 million tires .
By Park Ga-young (email@example.com