Creditor delays decision on Kumho Tire deal

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Creditor delays decision on Kumho Tire deal

The main creditor of Kumho Tire, the country’s second-largest tire maker and currently up for sale, has delayed its decision on whether to approve Kumho Asiana Group Chairman Park Sam-koo’s request to form a consortium to acquire the company.

Korea Development Bank, the lead creditor, was supposed to issue a statement regarding Park’s proposal on Monday and announce the result today. A source at the bank, though, said it has yet to submit the statement to other creditors in order to look into details of the request.

“We are sifting through the legal and procedural matters [about the proposal]),” the source said requesting anonymity because of the sensitivity of the matter, “but it is not like an indefinite delay, and the submission will be made in a day or two.”

Among the creditors, Woori Bank has 33.7 percent voting rights, Korea Development Bank 32.2 percent and KB Kookmin Bank 9.9 percent. For the chairman’s bid to be accepted, 75 percent approval is required, which means both the main creditor and Woori Bank will have to agree to the request.

Korea Development Bank has expressed discontent about Park’s decision to form a consortium to reacquire the tire unit his group once held. Kumho Asiana lost the right to manage Kumho Tire in 2009 after a severe liquidity problem, and in 2010, creditors granted Park the right of first refusal when Kumho Tire goes on sale. With the right, Park can buy back the company’s management rights as long as he can pay the same amount as the highest bidder.

On principle, Korea Development Bank said Park could not share that right with another entity.

Should Park’s proposal go unapproved, Kumho Tire will likely go in the hands of Doublestar, a Chinese tire manufacturer that signed a share purchase agreement earlier this month.

Presidential hopefuls in Korea have been raising a fuss over the possibility of Kumho Tire going to a foreign company, and the negative public sentiment has put Korea Development Bank in a bind. Democratic Party candidate Moon Jae-in, who currently leads in polls, expressed his objection to Doublestar’s buyout, citing the need to protect jobs at Kumho Tire.

In response, Doublestar on Tuesday assured the company would maintain the tire marker’s Korean staff when it obtains a controlling stake of 42.01 percent.

“Doublestar’s stance is to maintain Kumho Tire under independent management even after Doublestar’s status is elevated to largest shareholder,” the Chinese company said in a statement.

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