Creditors negative over domestic company's sudden bid for Kumho Tire

By Lim Chang-won Posted : March 27, 2018, 15:41 Updated : March 27, 2018, 15:41

[Yonhap Photo]



SEOUL -- Korea Development Bank (KDB), the key creditor of Kumho Tire, remained cynical over a sudden overture by South Korean tire retailer Tierbank to buy the debt-stricken tiremaker, saying it is unrealistic due to the lack of time.

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.

"It's unrealistic," a KDB official told Aju News, expressing doubt about Tirebank's ability to mobilize a large sum of money in a short period of time. The state policy bank thinks Kumho Tire needs a quick injection of liquidity to avoid bankruptcy.

KDB regards China's Doublestar as the sole candidate to buy a 45-percent stake in Kumho Tire. It has warned of court receivership unless Kumho Tire presents a self-rehabilitation package by the end of this month, but Kumho Tire's union has refused to accept Doublestar's ownership.

In a letter to all Kumho Tire workers, Doublestar Chairman Chai Yongsen clarified his strong desire to run the debt-stricken tire company as an independent entity.

"Although Kumho Tires is suffering from unprecedented difficulties, it will be reborn as one of the world's best tire companies if Doublestar and Kumho Tire work together with one heart," Chai said in the letter published by the South Korean company.

Kumho Tire's non-union members and white collar workers supported Doublestar's bid while union leaders insisted a domestic company should take over to prevent a technology leak. The union welcomed Tirebank's bid, although market watchers expressed doubt about its financial ability.

Tirebank s relatively a small company which runs about 400 tire discount stores across South Korea with sales standing at 370 billion won (342 million US dollars) in 2016. The acquisition requires a short-term liquidity of more than one trillion won because of snowballing debts.

"We will secure the acquisition fund by listing Tirebank on the bourse or presenting it to creditors as collateral," Kim said, adding his company could invite foreign partners. "If we acquire Kumho Tire jointly with foreign companies, the funding problem will be solved."

At least two big foreign firms have expressed their intention to join the race if Tirebank manages Kumho Tire's domestic operation, he said, adding he was ready to manage the tiremaker even after it was put under court receivership.
 
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