Qingdao Doublestar moves to cancel Kumho Tyre purchase.
China’s Qingdao Doublestar has sent legal documents to the creditors of Kumho Tyre saying it agrees to cancel the deal to buy a controlling stake in the South Korean tyre maker, an official at a key creditor bank told media September 12.
The official at Korea Development Bank (KDB) said the bank requested Doublestar send the original documents by Wednesday to review whether they are legally valid. If the validity of the documents is confirmed, KDB will likely announce a formal cancellation of the deal to sell Kumho Tyre to Doublestar. Doublestar signed the 955 billion-won ($845.4 million) contract with creditors in March to buy a 42% stake in Kumho Tyre.
After months of disputes over the use of Kumho Tyre’s brand, the Chinese company submitted documents in early August for approval from the South Korean government in what appeared to be the final step in completing the acquisition. However, Doublestar later demanded the creditors cut the price by 16% to 800 billion won based on Kumho’s low earnings. Last week, Kumho Tyre’s creditors decided to reject Doublestar’s demand to cut the price.
Meanwhile, Kumho’s creditors led by Korea Development Bank have rejected a management plan from Kumho Asiana Group for saving the tyre company. Creditors are asking for more detail about the plan’s execution before they meet next week. The request puts more pressure on Kumho Asiana chairman Park Sam-koo to come up with new measures to keep Kumho Tyre afloat. If the revised plan is also rejected, the creditors will begin steps to remove Park Sam-koo from the leadership of Kumho Tyre and the company could be placed under court receivership, news sources said.