Two Kumho Tire union leaders remain holed up on top of an iron tower near their factory in Gwangju, holding up a banner reading "No sale of Kumho Tire to any foreign company!" [Yonhap Photo]
SEOUL -- Creditors brought back Doublestar Friday as the potential buyer of Kumho Tire, saying the Chinse company is the most reasonable alternative for a quick turnaround in the troubled operation of South Korea's second-largest tire maker.
Creditors led by Korea Development Bank (KDB), a state policy lender, will reopen negotiations on an investment of 646.3 billion won (597.3 million US dollars) from Doublestar to acquire a 45 percent stake in Kumho Tire.
Creditors saw Doublestar as the most reasonable alternative to minimize losses and normalize Kumho Tire's operation quickly, KDB Vice Chairman Lee Dai-hyun told reporters. "We have concluded that attracting foreign capital is the more reasonable way to normalize Kumho Tire's operation."
Sincere talks with Doublestar are "under way", he said, adding creditors hope to complete negotiations by the end of June.
In March last year, Doublestar signed a share purchase agreement to secure a controlling 42.01 percent stake in Kumho Tire for 955 billion won but the deal broke down because of disputes over job security and the use of Kumho's brand. The Chinese company also insisted on a price cut by 16 percent to 800 billion won, citing Kumho Tire's operating loss.
Kumho Tire's union and the regional community have favored a domestic buyer, but KDB concluded creditors cannot extend loans forever to keep it afloat because fresh liquidity from creditors could be used to rescue its debt-stricken factory in China.
Lee warned that KDB has no other choice but to put Kumho Tire into court reveirvership if its union continues to oppose a foreign buyer.
Doublestar is under pressure to invest more into Kumho Tire's operation in South Korea, guarantee job security for three years and remain as the largest shareholder for five years. Other contentious issues are government approval and the use of Kumho's trademark and the extension of bonds.
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. Last year, the company's net loss rose to 88.56 billion won from 37.9 billion won a year earlier, and sales fell 2.4 percent on-year to 2.88 trillion won.
reporter
Lim Chang-won
cwlim34@ajunews.com
