Kumho Tire makes last ditch effort to buy back tyre unit
Kumho Asiana Group Chairman Park Sam-koo is drawing near to the long-awaited reclamation of Kumho Tire, as the company’s creditors are set to sign a stock purchase agreement with preferred bidder Qingdao Doublestar.
The deal to acquire a controlling stake in Korea’s second-largest tyre company is worth 955 billion won ($826.5 million). Although Doublestar has been named the preferred bidder, Park retains the right of first refusal.
When Kumho Tire was sold in 2009, one of the conditions was that Park would be able to buy back the controlling stake at the same price as the preferred bidder.
Once the final stock purchase agreement is signed, the main creditor Korea Development Bank has three days to notify Park, who will then have 30 days to decide whether he wishes to pre-empt the purchase.
“(Chairman Park) has continuously expressed his determination to buy back Kumho Tire, so there is no question about that,” said a spokesman for Kumho Asiana Group, who declined to comment on the forthcoming procedures until the stock purchase agreement is officially announced to Kumho.
The buyback agreement specified that Park cannot involve Kumho affiliates to come up with the funds to buy Kumho Tire, which means that Park an only use personal funds.
Therefore, Park set up a special purpose company called Kumho Invest Incorporation. According to him, he has already raised 1 trillion won from financial investors through that company.
However, industry watchers say that it is more likely that Park will hold off making an official buyback bid until the one-month deadline draws near so that he has more time to raise funds through strategic investors.
If Park cannot come up with an appropriate funding plan, the deal goes back to Doublestar. The Chinese company stands to gain significant global production capabilities from the deal thanks to Kumho’s factories in Korea, China and the US.