Creditors reject proposed cut in bidding price for Kumho Tire

By Lim Chang-won Posted : September 5, 2017, 17:30 Updated : September 5, 2017, 17:30

[Kumho Tire]


Creditors reportedly rejected an offer by China's Doublestar to cut the bid price for a controlling stake in South Korea's second-largest tire maker, Kumho Tire, clouding prospects for the deal that sparked a patriotic challenge amid a diplomatic row between Seoul and Beijing over a US missile shield.

Doublestar signed a share purchase agreement in March with creditors to secure a controlling 42.01 percent stake in Kumho Tire for 955 billion won (842 million US dollars). But the deal has not been closed because of disputes over job security and the use of Kumho's brand.

The Chinese company has insisted on a price cut by 16 percent to 800 billion won, citing Kumho Tire's operating loss, but creditors did not accept it, according to Yonhap News Agency.

Kumho Asian Group chairman Park Sam-koo has opposed the deal, insisting his group should buy back Kumho tire. Creditors rejected Park's proposal, citing doubts about his financial ability, but community people supported Park's claim that Kumho Tire should not be turned over to a foreign company especially from China.

Trade Minister Paik Un-gyu has expressed concern about technology spills and a negative impact on the regional economy. If the deal breaks down, Park will be allowed to exercise his right to buy back Kumho Tire.

Kumho Tire with plants in China, Vietnam, and the United States was put under a debt workout program in December 2009 due to a severe liquidity crunch. It graduated from the program in late 2014.

The company has been in the red this year, posting an operating loss of 28 billion won in the first quarter and 23 billion won in the second quarter. Sales fell sharply in China amid a row over the deployment of a Terminal High Altitude Area Defense (THAAD) battery in South Korea.


 
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