SEOUL, Nov. 28 (Korea Bizwire) — The chief of Kumho Asiana Group, an airline-to-construction conglomerate, said Tuesday he won’t buy back the conglomerate’s former tire unit Kumho Tire Co. now controlled by creditor banks.
In a press conference held at its headquarters in Seoul, Kumho Asiana Chairman Park Sam-koo made it clear that the group does not have “any intention” to buy back the tire company, a corporate spokesman said by phone.
“Frankly speaking, I had keen interest in Kumho Tire but now have fully given up my right of first refusal (in an auction to sell the tiremaker) for the company’s future,” he said.
Under the right of first refusal, the chairman has the priority to buy back the company when it is up for sale.
The chairman hoped Kumho Tire will reemerge as a financially healthy and competitive company after being acquired by a company which is “better than” the group.
Currently, nine creditors led by the state-run Korea Development Bank (KDB) have entered into a debt restructuring process for the financially troubled tiremaker. They have extended debt worth 1.3 trillion won (US$1.1 billion) maturing this month to the end of this year.
In March, Qingdao Doublestar, a Chinese tiremaker, signed a 955 billion won contract with the KDB-led creditors to buy a 42.01 percent stake in the Korean tiremaker.
The deal, however, was scrapped when creditors rejected Doublestar’s demand to cut the purchase price by 16 percent to 800 billion won, citing deteriorating earnings.
In the January-September period, Kumho Tire’s net losses deepened to 59.91 billion won from 54.93 billion won a year earlier.
The company, which earns about 22 percent of its sales from its North American operations, opened its first U.S. plant with an annual capacity of 4 million units in Georgia last year. Its global capacity stands at 65 million tires per year.