After a year of negotiation regarding the acquisition of Kumho Tire by Qingdao Doublestar, the deal could be back at square one. Earlier this week, creditors of Kumho Tire rejected Doublestar‘s demand of a lower bid price for controlling stake in the company. If Doublestar refuses to negotiate, the deal is dead.
Doublestar signed a contract with the creditors to buy a 42.01 percent stake in Kumho Tire for 955 billion won ($844 million). The Chinese firm has been demanding the creditors to cut 16 percent of the sale price, citing the company’s falling profits. According to The Korean Herald, “The two sides have been also locking horns over the issues of securing jobs for existing Kumho Tire employees and keeping the tiremaker’s production units in South Korea.”
While creditors agreed to ask Kumho Tire management to submit a self-rescue plan for the company to address liquidity concerns, officials said they would fire leadership at Kumho Tire (including Kumho Asiana Group Chairman Park Sam-koo) if the company does not come with proper plan to increase profit, according to reports.
And even if the creditors accept Doublestar’s demands of a discounted sale price, Park would be given an opportunity to buy back or reject the offer.