Kumho Industrial bid ends fruitless

The latest bid for controlling shares of Kumho Industrial Co., the de facto holding firm of Kumho Asiana Group, ended in vain, industry sources said Tuesday, as the sole bidder's offered price did not meet expectations.

The decision came after Hoban Construction Co., a mid-sized local builder, made a solo final bid for the 57.5 percent stake in Kumho Industrial at 600.7 billion won (US$561 million). Kumho Asiana Group controls Asiana Airlines Inc., the country's No. 2 air carrier.

According to sources, Korea Development Bank (KDB), the lead manager of the stake sale, and creditors decided not to accept the bid, apparently as the amount suggested by Hoban Construction failed to meet their earlier expectations.

In January, KDB and other creditor banks announced the sale of the stake, or about 19.55 million shares, in Kumho Industrial, which they had acquired through a debt-for-equity swap. The builder was lifted from a five-year debt workout program a month earlier.

The builder had been struggling from mounting debt amid adverse property market conditions. Its parent group lapsed into a liquidity crunch in 2006 after buying a 72.1 percent stake in Daewoo Engineering & Construction Co. for 6.4 trillion won.

Market watchers earlier expected the bidders will offer as much as 1 trillion won in an effort to gain the management rights to some of the more profitable Kumho subsidiaries.

Shares of Kumho Industrial closed up 1.56 percent at 22,850 won on the Seoul bourse.

Kumho Industrial is the largest shareholder of Asiana Airlines with a 30.08 percent stake. Taking over the construction firm alsoensures management control of budget carrier Air Busan Co. and four other Kumho affiliates.

Park Sam-koo, president of Kumho Asiana Group, is also a likely contender in the stake sale as he seeks to piece back together his former business group with the purchase of the builder.

The 70-year-old Park has the right of first refusal in the bid, which allows him to either buy a 50 percent stake plus one share or not enter the bid at all, depending on how much he needs to pay to outbid rivals. (Yonhap)