Seoul – Kumho Tire creditors, led by Korea Development Bank, have reportedly warned the company’s former parent group that they will no longer offer financial rescue to the tire-maker if the deal to sell 42.01% majority stake to China’s Doublestar Tyre Co. falls through.
According to South Korean business news website, Pulse News under the renewed ultimatum, Kumho Tire could default on 1.3 trillion won (€1 billion) worth of bonds that mature this month.
The report added that in a 20 June meeting, the creditors decided “to seek to oust executives of Kumho Tire, including Park Sam-koo, chairman of Kumho Asiana, deprive Park of his purchasing rights to Kumho Tire and re-examine financial transactions with other Kumho companies.”
As reported by ERJ earlier, Kumho Asiana Group, which owns the trademark rights to Kumho Tire, has asked for the Chinese group to pay 0.5% of annual sales as trademark fees for the next 20 years.
In the deal signed with Doublestar in March, the Qingdao-based tire maker was asked to pay 0.2% of annual sales for five years after the acquisition.
According to Pulse News, Kumho Tire’s operating capital runs out in early July and if the two sides fail to agree, the tire company may be “headed for a bankruptcy court.”
Doublestar signed a KWR995 billion (€778 million) stock purchase agreement with Kumho creditors in March to acquire a 42.01% majority stake in the Korean tire company.
As the former owner of the business, Park Sam-koo had the right to match Doublestar’s bid to buy back the shares.
He gave up the right in April claiming the creditors had denied him the chance to form a consortium to finance the buy-back.