Doublestar’s purchase of Kumho Tyre near collapse.
The sale of Kumho Tyre is on the verge of falling apart since the company’s creditors decided not to accept a demand to cut the sale price from China’s Doublestar on September 5, Korean news sources are reporting.
The Korea Development Bank, Kumho Tyres’ main creditor, said September 6 that it will send a document requesting the nullification of the stock purchase agreement to the Chinese firm. If Doublestar accepts the agreement, the deal will officially end. Doublestar demanded a change in the stock purchase contract (SPA) for its purchase of 42% of the Korean tyre maker, saying that lowering Kumho Tyre’s selling price by 16.2% from 955 billion won to 800 billion won was needed based on lower than expected company earnings.
The creditors did not accept Doublestar’s demand and are taking steps to terminate the contract that the KDB and Doublestar signed in March. The breakdown of the deal means the sell-off of the tyre manufacturer will go back to square one after a year-long effort. An official of the creditors, said: “We negotiated with Doublestar about a price cut a number of times, but failed to iron out differences. That brought the termination of the SPA as an agenda for a shareholder meeting.” The tyre company earned 55.8 billion won in operating profit during H1 2016 and shifted drastically to post a 50.7 billion won operating loss during H1 2017, news sources said.