[FOCUS] Kumho Tire shares up on news about bidding

By Park Sae-jin Posted : August 30, 2016, 11:14 Updated : August 30, 2016, 11:14

[Courtesy of Kumho Tire]



Shares of Kumho Tire Co. rose sharply Tuesday on news that creditors will kickstart the process of selling a controlling stake in the world's 12th largest tire maker with an international product base.

Nine creditor banks acquired a combined 42.01 percent stake in Kumho Tire when its former parent Kumho Asiana Group put it under a debt workout program in December 2009 due to a severe liquidity crunch stemming from the purchase of Daewoo Engineering and Construction Co.

Creditors have sought to sell the stake since the country's second largest tire company with plants in China, Vietnam and the United States graduated from a workout program in late 2014.

As of 10:00 am (0100 GMT) Tuesday, Kumho Tire shares gained 5.59 percent at 10,200 won (9.1 US dollars) on news that creditors would start getting letters of intent from investors in mid-September with the main bidding slated for January next year.

Kumho Asiana Group chairman Park Sam-koo has expressed his willingness to take back Kumho Tire after he completed the merger between Kumho Terminal and Kumho & Company to create the group's holding company this month.

He already bought back Kumho Industrial from creditors last year as a part of his efforts to rebuild the tattered empire which has been mired a prolonged family dispute with his younger brother Park Chan-koo.

After ending the family conflict, Park Sam-koo has accelerated the third-generation transfer of group leadership to his eldest son, Park Se-chang.

The group chairman has the preemptive right to buy back Kumho Tire as an individual, but there have been doubts among market watchers about his ability to finance the deal because he already spent about 723 billion won to take over Kumho Industrial.

Without exercising his right, he could participate in the bidding by forming a consortium with other investors.

In an apparent attempt to bolster his position this week, Asiana Airlines, a key group subsidiary, officially pulled out of a project to build a site for aircraft maintenance, repair, and operations in the central city of Cheongju.

Kumho Tire's sale price is estimated at between 700 billion won and 1 trillion won. However, analysts predict the company's poor performance may have a negative impact on the price.

Kumho Tire's second-quarter operating profit stood at 40.7 billion won, down 26.4 percent from a year ago. Its poor performance was blamed on decreasing sales of conventional tires.

Aju News Lim Chang-won = cwlim34@ajunews.com 
 
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