S. Korean tire retailer intends to buy debt-stricken Kumho Tire

By Lim Chang-won Posted : March 27, 2018, 09:13 Updated : March 27, 2018, 14:49

[Yonhap News Photo]


SEOUL -- The proposed sale of Kumho Tire to a Chinese company took a new turn Tuesday after a South Korean tire retailer announced its sudden bid for the country's second-largest tiremaker, appealing to patriotism.

Tirebank chairman Kim Jong-kyu portrayed his company as a perfect alternative to save Kumho Tire because it can use its nationwide sales network to quickly raise sales. He promised to make a final decision after consulting public views and the opinion of Kumho Tire's union and creditors

"I feel sad to see Kumho Tire's sale to China's Doublestar," he told reporters. "I decided to push for the acquisition of Kumho Tire because I can't keep watching it as a domestic company."

Apparently aware of doubts about his financial ability, Kim called for public help or social contributions to rehabilitate Kumho Tire and prevent technology spills.

Kim's company, which runs about 400 tire discount stores, posted 372 billion won (342 million US dollars) in sales, an operating profit of 66.4 billion won and a net profit of 27.2 billion won in 2016.

Creditors led by Korea Development (KDB) has designated China's Doublestar as the sole candidate to buy a 45-percent stake in Kumho Tire for 646 billion won. The Chinese company has offered to spend extra money for the restructuring of the debt-stricken tire maker.

KDB, a state policy lender, has warned of court receivership unless Kumho Tire presents a self-rehabilitation package by the end of this month. However, Kumho Tire's union has refused to accept Doublestar's ownership.

During his trip to South Korea last week, sDoublestar Chairman Chai Yongsen said he would nurture Kumho Tire as an internationally viable tire maker controlled by professional managers if its union accepts his ownership. He said Kumho Tire would focus on mid and high-end tires for passenger vehicles while Doublestar specializes in mid and low-end tires for trucks and buses.

In March last year, Doublestar signed a share purchase agreement to secure a 42.01 percent stake in Kumho Tire, but the deal broke down because of disputes over job security, the use of Kumho's brand, a proposed cut in prices, and the union's objection among other things.

Kumho Tire was put under a debt workout program in December 2009 due to a severe liquidity crunch. It graduated from the program in late 2014, but the company's crisis has been aggravated by poor sales in China and mismanagement by its former owner, Kumho Asiana Group.



 
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