Creditors of Kumho Tire delays meeting as Doublestar demands discount
SEOUL-- Creditors of Kumho Tire Co. on Tuesday postponed their meeting after China's Qingdao Doublestar Co. demanded a cut in its bidding price for the South Korean tiremaker.
The creditors, led by the Korea Development Bank (KDB), had been scheduled to hold the meeting earlier in the day to discuss Doublestar's demands.
Doublestar signed a deal with the creditors in March to buy a 42.01-percent stake in Kumho Tire for 955 billion won (US$841.7 million).
After months of a bitter dispute over the use of Kumho Tire's brand, the Chinese company submitted documents last week for approval from the South Korean government in what appeared to be a final step to complete the acquisition.
However, Qingdao Doublestar has recently demanded the creditors cut the price by 16 percent to 800 billion won, adding a new twist to the Chinese firm's bid to acquire Kumho Tire.
An official at the KDB said the creditors' meeting was delayed because "more consultations with Doublestar are needed."
The meeting could be held on Wednesday, but it could be delayed again, the KDB official said.
Under the terms of the March deal, Doublestar has the right to cancel the deal if Kumho Tire's operating profit falls more than 15 percent on year as of Sept. 23, when the contract ends.
In the first six months of this year, Kumho Tire suffered an operating loss of 50.7 billion won, compared to a profit of 55.8 billion won for the same period last year.
Industry sources said Doublestar demanded the creditors lower the price of Kumho Tire, instead of canceling the deal outright.
If the creditors accept Qingdao Doublestar's demand, it would allow Park Sam-koo, the chairman of Kumho Asiana Group, which is the parent of Kumho Tire, to exercise his right to buy back the tiremaker.
Also, the creditors need to renegotiate with Doublestar over the usage fee of the Kumho Tire brand.
Still, observers said it remains unclear whether the creditors will accept the demands or not.
Source: Yonhap News Agency