Kumho fires back at creditors over tire deal

Park Sam-koo

The conflict between Kumho Asiana Group and creditors of cash-strapped tire affiliate Kumho Tire intensified Tuesday after the parent company said it would take legal action against the main creditor, Korea Development Bank, as the group attempts to reacquire its affiliate.

“Despite continuous requests to the KDB to examine whether Kumho Asiana could form a consortium when exercising the right of first refusal, the bank has never even mentioned the issue at the creditors’ meeting and has unilaterally maintained its stance to disallow the group from forming a consortium,” Kumho Asiana Group said in a statement. “We are going to take legal action against it.”

According to Kumho Asiana Group, the contract with creditors promised Kumho Chairman Park Sam-koo the right of first refusal and allowed the establishment of a consortium to reacquire Kumho Tire as long as there was written approval from creditors.

“The court will decide how the article should be interpreted,” a Kumho Asiana spokesman said.

The company insisted that KDB is not following the proper process in carrying out the acquisition deal.

“KDB has never officially told us that we are not allowed to form a consortium but has only expressed their stance through the media,” Kumho Asiana Group said.

“Such an attitude is not understandable.”

Kumho Asiana announced Monday that it was going to give up its right of first refusal if the creditor banks were to continue rejecting their request to form a consortium.

KDB maintained its stance to not allow such a request, saying it was “absurd” to make such a change at the moment.

Doublestar, a Chinese tire company which was selected as a preferred bidder in January, signed a share purchase agreement on Monday, finalizing the price of Kumho Tire’s 42.01 percent of shares at 955 billion won ($830.9 million). Chairman Park has to come up with at least that amount within 30 days after the creditors notify Kumho Asiana of the agreement details.

KDB said Tuesday it has notified Kumho Asiana of the contract terms.

“The proper procedure is simple,” a KDB spokesman said. “Park can decide whether he wants to claim his right of first refusal within the next three days and submit official papers that he has the financials to do so.”

Kumho Tire shares closed at 8,430 won on Tuesday, down 3.88 percent from the previous trading day.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]