Stakes are running high as Kumho Asiana Group gears up for a legal fight over the acquisition of a controlling stake in Kumho Tire, as it continues to demand that creditors allow Chairman Park Sam-koo to form a consortium to fund the purchase.
The main point of conflict currently involves the deadline upon which Park is to specify whether he would move to buy back the 42 percent controlling state that is to be sold to Chinese tire maker Doublestar unless he does.
On Friday, Park rejected an April 19 deadline set by creditors, citing procedural problems in the acquisition deal.
“Kumho Asiana Group has made it clear that Korea Development Bank‘s offered date of April 19 is not the deadline for exercising right of first refusal,” the company said through a statement. KDB is currently acting as a representative for the shareholders’ association.
Kumho Asiana Group Chairman Park Sam-koo (Kumho Asiana)
The company argues that they have not yet been officially notified of the stock purchase agreement between China’s Doublestar and the creditors signed on March 13.
Doublestar has offered to buy the stake for 955 billion won ($889.6 million). The signing was announced to Kumho the next day, and to Park on March 15. The company insists it should be given a copy of the SPA for the notification to be official.
Park, who holds the right of first refusal on the sale of the tire unit, has 30 days to clarify his position upon notification of the deal between the preferred bidder and creditors.
Park has been vocal in his determination to buy back the company, as he seeks to complete the reconstruction of Kumho Asiana. Pieces of the group including Kumho Tire were handed over to creditors in 2009 as part of a debt restructuring program.
The problem is how he will find the funds to make the purchase.
According to Kumho Asiana, it is impossible for Park to recruit investors for a plan without assurances that the consortium will be permitted.
Creditors say that Doublestar signed the agreement under the understanding that Park would only be able to block the deal if he funded the purchase using only his personal assets. However, Park claims there is nothing in the original contract that prevents him from forming a consortium of strategic investors to raise the money.
On Tuesday, Kumho Tire’s creditors announced they had officially voted to disallow Park to form a consortium for the acquisition, leaving open the “possibility of another discussion” if Park submitted a “detailed and valid“ payment plan.
Park is standing his ground, demanding that creditors produce the document it had sent Doublestar outlining the conditions of his right of first refusal, while KDB says that it will only provide the document if compelled by a court to do so.
Kumho Asiana says that it will decide on legal action against the creditors’ sale to Doublestar based on this document.
Park raised other procedural issues as well on Friday, such as uncertainties over the conditions for Doublestar‘s use of the Kumho brand and adjustments to Kumho Tire’s existing debt obligations.
The spat is escalating as public opinion turns against the deal with Doublestar amid rising tensions between the Korean and Chinese governments over the installment of an anti-missile system here.
Although Doublestar has agreed to maintain all existing employee contracts after acquiring the public stake, employees are opposing the deal, saying Kumho Tire’s technology should stay with a Korean company.
By Won Ho-jung (hjwon@heraldcorp.com)
