After last month’s news that China’s Doublestar would by the likely buyer of Kumho Tire https://rubberjournalasia.com/kumho-likely-to-be-sold-to-chinas-doublestar/, it now appears that Kumho Asiana Group Chairman Park Sam-Koo has raised nearly US$870 million to buy back a controlling stake in the group’s former tyre unit, according to a report in Korea Times.
It is reported that Park secured the funds from several financial investors and business associates to buy a 42.1% stake in Kumho Tire held by the Korea Development Bank (KDB) and other creditors.
Park will set up a wholly owned special-purpose company to receive funds from unnamed investors, according to the report.
Creditors had in January selected Double Star Tires, a mid-tier Chinese tyre maker, as a preferred negotiator, after it outbid two other Chinese contenders ? Shanghai Aerospace Industry Corp. and Jiangsu GPRO Group.
The Chinese company reportedly offered to pay between 950 billion won and 1 trillion won for a controlling stake. To retake control of Kumho Tire, Park must beat Double Star’s offer.
Creditors plan to sign a stock purchase agreement with Double Star later in February and inform the Kumho Chairman of the sales price and other conditions. Park will then have to let creditors know within 30 days whether he will pay a higher price or give up his right.
The Kumho chief is not allowed to acquire the stake through a third party because the creditors decided not to allow him to transfer a prior stock purchase right to a third party.
Park cannot mobilise Asiana Airlines or other group units either to reacquire the tire unit, meaning he has to use his personal funds.
This has left Park with no choice but to establish a private company to raise the money. The Chairman is short of cash after spending tens of billions of won buying back control of Kumho Industrial and increasing shares in other group units.
The banks acquired their stake in a debt-for-equity swap in 2010 when Kumho Asiana suffered a severe liquidity shortage. They then signed an agreement to negotiate first with Park when unloading their Kumho Tire stake.
Besides four plants in China, Kumho Tire operates three plants in South Korea and one each in Vietnam and the US. In 2016, the company had 2.95 trillion won in sales and posted a 120 billion won operating profit.