Kumho Asiana chief passes on buyback

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Kumho Asiana chief passes on buyback

Kumho Asiana Group Chairman Park Sam-koo decided not to exercise his right to reacquire the group’s former subsidiary Kumho Tire, according to a company statement released Tuesday.

Park’s decision comes after its main creditor state-run Korea Development Bank declined his request Monday to form a consortium to buy back the tire company, for which the Chinese tire company Doublestar is currently top bidder.

The statement is also a response to KDB’s request last month for Park to decide whether he will exercise his rights of first refusal and reacquire the company. KDB set Wednesday as a deadline for Park’s reply.

In Tuesday’s statement, Kumho insisted the deal to sell the local tire company to Doublestar was “unfair” and “unjust,” because creditors had allowed the Chinese tire maker to submit the bid as a consortium.

“Creditors should immediately halt the ongoing deal and open a fair rebidding for Kumho Tire,” the local conglomerate said in Tuesday’s statement.

Since early March, Park has urged Kumho Tire creditors to allow him to form a consortium to reacquire the local tire company, which the group lost in 2009 due to liquidity crisis. Park can regain control of Kumho Tire if he can pay at least 1 won (0.09 cents) more than the price suggested by current top bidder, Doublestar, which is offering 955 billion won, but he lacks the money to do so alone.

KDB and Kumho Tire creditors have rejected his plan, saying that the right was applied to Park as an individual and therefore cannot be shared with a third party.

Against this stance, Kumho Asiana Group has hinted the possibility that a lawsuit against creditors is possible, citing unjust procedures.

In Tuesday’s statement, however, the group said that it would not take legal action in the meantime. A company spokesman said that legal action “can impose a burden on Kumho Asiana’s current management activities and development in the future.“

But it implied the possibility of a future suit, saying the company will undergo “any necessary measure, including lawsuits, if the unfair and unjust deal procedures jeopardize Kumho Tire’s corporate value and future growth.”

Meanwhile, KDB said that it will not accept Park’s request to reopen the bid. Kumho Tire creditors said last month it would revise Park’s consortium plan on the condition he devise a more detailed portfolio, which includes plans to come up with funds and the size and credibility of partners..

However, Park’s statement to not exercise the right of buyback doesn’t mean that he is giving up on Kumho Tire. If the deal between creditors and Doublestar is not finalized in six months, Park’s right of first refusal revives. In fact, the deal still has several issues such as the problem of trademark rights on the name Kumho and the disagreement between creditors and Doublestar on the due date of Kumho Tire’s 1.6 trillion-won loan repayment.


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

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