Kumho Asiana Group Chairman Park Sam-koo said he was giving up his right of first refusal to reclaim Kumho Tire Co., Korea’s second largest tire maker his father founded, complaining of unleveled sales process from creditors by denying him of the chance to form a consortium to finance the buyback.
Park said in a statement on Tuesday that creditors led by the Korea Development Bank (KDB) notified him on Monday that they would not allow him to form a consortium to take over the tire company even though the preferred bidder China’s Doublestar Tyre Co. had won the preferential title in a consortium. “I cannot go along with such unfair sales deal and therefore won’t exercise by right of first refusal,” he added.
Park received the right of first refusal, which allows him to redeem the management control if he can match the price offered by the preferred bidder, in 2012 upon injecting 113 billion won out of his own pocket to help the tire company he surrendered to creditors in 2009.
The right is confined to him and his eldest son Park Se-chang and they are banned from getting any financial help from group affiliates.
Due to the difficulties in coming up with at least 955 billion won ($839 million) alone, Park asked creditors to allow him to get outside help by forming a consortium, arguing for the same term with the Chinese bidder. But they finally turned down the request as the buyback right is limited to him and his eldest son.
Industry experts deem Park was buying time by withholding the right carrying a clause that can be revived when the acquisition is not finalized six months he gives up the right upon political and economic developments. Moon Jae-in, the front-leader in the presidential race whose voting base is Honam region where Kumho is based in, has been critical of a major tire company going into the hands of Chinese manufacturer. Other candidates also have been making similar promises to the residents who have been protesting to the company’s sales in fear of massive layoffs.
Last month, Kumho Tire creditors signed a deal with the Chinese rival Doublestar to sell majority stake of 42.01 percent plus management right in the company for 955 billion won.
It is still very difficult to predict in whose hands Kumho Tire would end up.
It won’t be easy for the creditors to pull out of the deal with Doublestar due to a risk of an international lawsuit. The Chinese company has three months to make the full payment for Kumho Tire and another month to receive the government approval. Creditors can also request a one-month extension to sign a final deal. If Doublestar, however, speeds up the purchasing process and seals the final deal, Park would not have a second chance.
By Kang Young-woon
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]