Kumho Tire, last step in Park’s empire rebuilding

[THE INVESTOR] Creditors of Kumho Tire, Korea’s second-largest tire-maker by revenue, are seeking a buyer for their combined controlling stake -- a sale that former owner Kumho Asiana Group Chairman Park Sam-koo would love to see fail.

Eight financial institutions, including Woori Bank and Korea Development Bank, on Tuesday put out a public notice of the stake sale. Credit Suisse is arranging the deal.

According to the announcement, the shares will be sold in an open auction, with preliminary bidding scheduled for November. The final round of bidding and the selection of a preferred bidder could take place in January. 

Chairman Park can preempt any sale to a third party by exercising his right of first refusal, which allows him to repurchase the stake under the same terms as the highest bidder.

“I will make that happen,” he said earlier this year, when asked about his intention to buy the creditors-held shares of Kumho Tire.

At stake is 42.01 percent of Kumho Tire, worth about 750 billion won ($670 million) based on the firm’s current share price. With management premiums, the price tag could be somewhere around 1 trillion won, local reports say.

Kumho Tire has graduated from a four-year debt workout program led by creditors at the end of 2014. For the first six months of this year, the firm logged 1.45 trillion won in revenue and 55.8 billion won.

Globally, it ranks 12th by sales, with production bases in Korea, China and Vietnam. This May, the tire-maker opened its first plant in the US state of Georgia, expanding its presence in the world’s largest tire market.

For Kumho Asiana Group, Kumho Tire is much more than just a tire-maker. It will be a trophy, symbolic of the group’s comeback from a crisis six years ago which saw the 70-year-old conglomerate’s chaebol ranking plunge to 29th from seventh, observers say.

Prior to the creditor receivership, the firm was one of the three cores of the group’s business portfolio, along with Asiana Airlines and Kumho Industrial.
Chairman Park lost control over Kumho Tire and Kumho Industrial to their respective creditors in 2010 in the height of a group-wide debt crisis. Earlier this year, he bought back control of Kumho Industrial from creditors for 723 billion won.

By Lee Sun-young/The Korea Herald (milaya@heraldcorp.com)