Subscribe
E-Paper
Lotte Chemical, SK Networks on lips of observers
By Jhoo Dong-chan
A domestic firm is said to have offered to acquire Kumho Tire through recapitalization worth 500 billion won ($458 million), but both creditors and the company denied the allegation.
According to the Korea Exchange (KRX), Tuesday, it requested Kumho Tire to disclose information about possible companies who have shown interest in acquiring the ailing tire maker.
Kumho Tire immediately reported there was nothing to the rumors, but expectations prevailed as Kumho Tire shares reached 4,210 won as of 2 p.m. Tuesday, up 9.92 percent from the previous session.
With its due diligence review scheduled to be disclosed this week, a couple of the nation's conglomerates, including Lotte Chemical and SK Networks, have allegedly expressed interest in acquiring Kumho Tire, but both companies declined to comment about it.
However, the state-run Korea Development Bank (KDB) that leads the tire maker's creditor group partly admitted the market's interests.
"There was an inquiry," a KDB official was quoted as saying.
"However, it was an unofficial one. We don't see it as that meaningful."
The official added creditors are discussing possible options, including a creditor-led workout program and pre-packaged plan, after the scheduled due diligence.
Last week, the troubled tire maker announced Kim Jong-ho was officially appointed as the company's president and CEO. The decision was made during the an extraordinary shareholders' meeting Friday.
Kim was tapped by creditors of the ailing tire maker as its CEO in October after Kumho Asiana Group Chairman Park Sam-koo, who was delegated with the management of Kumho Tire, resigned from the post to take responsibility for the tire maker's poor performance.
Park also decided to give up his right to buy back the debt-ridden company as well as his managerial right to help normalize the tire company under creditors' management. The group will also allow permanent use of the Kumho trademark, which had been a stumbling block in the sale to Double Star.
In March, the Qingdao-based Chinese tire maker signed a 955 billion won deal with the KDB-led creditors to buy a 42.01 percent stake of Kumho Tire.
The deal was, however, suspended when creditors rejected the Chinese firm's demand to cut the purchase price by 16 percent to 800 billion won, citing deteriorating earnings.
The deal finally collapsed following Park's refusal to accept the Chinese company's request for the use of the tire maker's brand name.
In the January-June period, Kumho Tire's net losses deepened to 108 billion won from 22 billion won a year earlier. At the end of June, it owed 2.74 trillion won to financial institutions.
