A new owner has arrived on the scene, but it is business as usual for Kumho Tire in Korea. The tyre maker has launched its first new tyre since Doublestar became Kumho Tire’s largest shareholder last month. More than 350 dealers from across South Korea attended the unveiling of the Kumho Majesty 9 Solus TA91 yesterday.
A very small percentage of Kumho Tire’s output in recent years was shipped to the Republic of Korea Air Force for its F-16 fighter and T-50 trainer jet, and this military business was a complicating factor in the sale a 45 per cent stake in the tyre maker to China’s Doublestar Tyre. Following the vote to accept Doublestar’s KRW 646.3 billion (£441.9 million) bid, Kumho Tire has requested that South Korea’s government cancel its designation as a defence-related company. This request is now being reviewed.
After months of uncertainty, union members within the Kumho Tire workforce voted on 30 March to accept the sale of a 45 per cent stake in the tyre maker to China’s Doublestar Tyre. It is understood that just over 60 per cent of voting union members were in favour of the sale, sparing Kumho Tire from receivership. The deal with unionised employees was sweetened by guarantees of their job security for at least the coming three years.
The clock is ticking, the labour union representing Kumho Tire’s workers still opposes the planned Qingdao Doublestar Tire acquisition, and creditor the Korea Development Bank (KDB) doesn’t think much of the alternative bid proposals announced this week. Time to find an alternative to liquidation is running out.
Sale agreement or receivership – according to creditors, 30 March remains the deadline for Kumho Tire. Yonhap News Agency writes that Lee Dong-gull, chairman and chief executive officer of the Korea Development Bank, has ruled out an extension to this deadline. This means that should its labour union not agree to Qingdao Doublestar Tire’s purchase of a 45 per cent share in the company, from Monday 2 April Kumho Tire will be bankrupt and placed under court receivership.
The latest news from South Korea suggests that local tyre distributor and retail network operator Tire Bank Co. Ltd. would like to purchase the Kumho Tire shareholding that China’s Qingdao Doublestar Tire is currently negotiating to acquire from creditors. The unexpected appearance of the Daejeon-based firm, which hinted it may bid together with one or more partners, further complicates an already drawn out and difficult transaction.
It won’t be a Good Friday for Kumho Tire if an agreement between its creditors and the labour union representing its workforce isn’t reached by the end of this week. Friday 30 March is the deadline set for a formal consensus regarding the sale of a 45 per cent share in the tyre maker to China’s Qingdao Doublestar Tire for KRW 646.3 billion (£421.7 million).
The Korea Development Bank (KDB) has denied finalising the sale of a 42.01 per cent share in Kumho Tire to Qingdao Doublestar Tire, but that’s exactly what we’d expect it to do until all the ‘i’s are dotted and ‘t’s crossed. Negotiations between Kumho Tire’s creditors and Doublestar recently recommenced, however The Korea Herald has quoted a KDB official as stating “nothing has been finalised.”
Creditors holding a 42.01 per cent share in Kumho Tire are going to look for a new owner – again. Some four months after Qingdao Doublestar Tire’s planned acquisition of the South Korean tyre maker collapsed, the Korea Development Bank (KDB) and the other creditors are said to be once more looking for an external investor.
Kumho Tire is no longer part of the Kumho Asiana Group. After submitting an application with the Korea Fair Trade Commission in November, on 29 December the tyre maker officially separated from the group as part of a restructuring programme organised by its creditors.
South Korean conglomerate SK Group has denied speaking with Kumho Tire creditor the Korea Development Bank about a potential acquisition. The denial was issued in response to an article published by a South Korean business daily that suggested SK Group was interested in acquiring around 30 per cent in the tyre maker through a KRW 700 billion (£478.6 million) capital increase.
Could a conglomerate of South Korean interests be looking at acquiring Kumho Tire? According to the Financial Times, local publication the Korea Economic Daily reports that a conglomerate has shown interest in doing just that through a rights offering.
A great deal of serious rallying takes place in Ireland, continually reminding us of the wealth of natural driving talent that exists on the island from which Paddy Hopkirk MBE emerged all those years ago. The conditions are often wet and slippery, and Kumho Tyres says this is a medium in which its competition tyres have frequently proved themselves the cream of the crop, adding that they often did once again in 2017.
A newspaper report suggesting that Kumho Tire may be placed under a court-led debt restructuring programme prompted an almost 30 per cent drop in the value of shares in the tyre maker yesterday. Reuters writes that, according to an article published by South Korean newspaper Segye Ilbo, main Kumho Tire creditor the Korea Development Bank is considering requesting a pre-packaged restructuring plan. Such a plan may result in Kumho entering into court-administered receivership.
As expected, Kim Jong-ho has returned as chief executive officer of Kumho Tire. The former company president and chief executive officer was named the tyre maker’s new chairman and chief executive officer at an extraordinary meeting of shareholders. It is understood that he will hold this position for a three-year term.
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