Creditors of Kumho Tire, Korea’s second-largest tire-maker by revenue, are seeking a buyer for their combined controlling stake -- a sale that former owner Kumho Asiana Group Chairman Park Sam-koo would love to see fail.

Eight financial institutions, including Woori Bank and Korea Development Bank, on Tuesday put out a public notice of the stake sale. Credit Suisse is arranging the deal.


According to the announcement, the shares, worth about 750 billion won ($670 million) based on the firm’s current share price, will be sold in an open auction, with preliminary bidding scheduled for November. The final round of bidding and the selection of a preferred bidder could take place in January. With management premiums, the price tag could be somewhere around 1 trillion won, local reports say.

Chairman Park can preempt any sale to a third party by exercising his right of first refusal, which allows him to repurchase the stake under the same terms as the highest bidder.

“I will make that happen,” he said earlier this year, when asked about his intention to buy the creditors-held shares of Kumho Tire.

Taking Kumho Tire back under his control, however, may be not as easy as it sounds, deal observers say.

A key issue is whether the tycoon is capable of bankrolling the reacquisition, after raising 723 billion won earlier this year to buy back Kumho Industrial, another former Kumho Asiana Group unit, from the hand of its creditors.

Furthermore, Kumho Tire is likely to garner interest from a range of potential buyers, including its global tire rivals. Private equity funds, which have been waiting for investment opportunities in this year‘s low buyout market, could find Kumho Tire attractive too, watchers say.

Mindful that Park’s preemptive right and strong resolve to use it can be a turnoff for those interested, the state-run KDB is trying to have the seller side shoulder some of the costs of due diligence incurred by potential buyers.

“The proposal has been presented to the creditors’ council,” a KDB official said.

Kumho Tire has graduated from a four-year debt workout program led by creditors at the end of 2014. For the first six months of this year, the firm logged 1.45 trillion won in revenue and 55.8 billion won.

Globally, it ranks 12th by sales, with production bases in Korea, China and elsewhere. This May, the tire-maker opened its first plant in the US state of Georgia, expanding its presence in the world’s largest tire market.

For Kumho Asiana Group, Kumho Tire is much more than just a tire-maker. It will be a trophy, symbolic of the group’s comeback from a crisis six years ago which saw the 70-year-old conglomerate’s chaebol ranking plunge to 29th from seventh.

Prior to the creditor receivership, the firm was one of the three cores of the group’s business portfolio, along with Asiana Airlines and Kumho Industrial.

Park lost control over Kumho Tire and Kumho Industrial to their respective creditors in 2010 in the height of a group-wide debt crisis.

By Lee Sun-young  (milaya@heraldcorp.com)