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).
Having previously been ruled out of the running to buy Kumho Tire, Qingdao, China-based manufacturer Doublestar Tire is once again in pole-position to buy the South Korean tyremaker. “Doublestar Tire is the best option in view of a fast restoration of Kumho Tire and its corporation in China and the minimization of our losses”, Kumho’s creditors said in a widely reported statement.
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.
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.
s
Kumho Asiana chairman Park Sam-koo may soon be back in the running to acquire a 42.01 per cent stake in Kumho Tire.
On Friday, we reported that Chinese tyre maker Qingdao Doublestar Tire was angling for a ten per cent discount on the 42.01 per cent stake in Kumho Tire it wishes to acquire. Not so, wrote The Korea Times over the weekend – according to its sources, Doublestar wants creditors to cut the price to KRW 800 billion (£544.6 million), a discount of 16.2 per cent on the original bid price.
Just when it seemed the sale of a controlling stake in Kumho Tire to Qingdao Doublestar Tire was in the bag, the Chinese tyre maker has surprised everyone with its demand that Kumho Tire’s creditors reduce their KRW 955 billion (£650.3 million) bid price by ten per cent. Will this cause the deal to fall apart?
According to industry sources, Kumho Tires’ creditors will return the agreement on use of the Kumho brand name to Kumho Industrial this week ahead of a planned signing of a contract before the end of the month.
Nothing now stands in the way of Qingdao Doublestar Tire’s acquisition of a 42.01 per cent share in Kumho Tire. Last Friday, the creditors of Kumho Tire accepted the offer made by Kumho Asiana.
Although it’s probably too early for champagne corks to pop, progress has been made in the Kumho Tire shareholding negotiations. Yonhap News Agency writes that the tyre maker’s creditors have “tentatively agreed to accept original proposals” made by Kumho Asiana, adding that this may pave the way for creditors to complete the sale of the 42.01 per cent shareholding to Qingdao Doublestar Tire.
Negotiations over the use of the Kumho brand name are drawing to a conclusion, with Park Sam-Koo and the board of Kumho Industrial Co. announcing their final offer following a meeting yesterday. This offer centres on the payment of 0.5 per cent of Kumho Tire’s sales in brand royalties for 12.5 years and a clause ensuring that Doublestar uses the Kumho name for the entire period.
Qingdao Doublestar Tire’s bid to acquire 42.01 per cent of South Korean tyre maker Kumho Tire is developing into a drama of the sort not witnessed since a stubborn Cooper Chengshan Tire helped derail Apollo Tyres’ purchase of Cooper Tire & Rubber. Business Korea writes today that 41 Kumho Tire executives, including chief executive officer Lee Han-seob, intend to resign should Kumho Tire’s creditors sell the share to Doublestar.
It’s more than two months since Qingdao Doublestar Tire was named the preferred bidder to acquire a 42.01 per cent share in Kumho Tire, yet a satisfactory agreement remains elusive. The most contentious point has been the use of the Kumho brand name, with rightsholder Kumho Industrial demanding 0.5 per cent of Kumho Tire’s revenues for 20 years for use of the name – significantly more than the 0.2 per cent for five years as previously agreed between Doublestar Tire and Kumho Tire’s creditors.
If you would like the latest news from the Chinese tyre industry in Chinese, visit our partner site TyrepressChina.com. Or click below to continue on Tyrepress.