State-run Korea Development Bank (KDB) is reattempting to sell Kumho Tire to Qingdao-based Doublestar Tyre through recapitalization scheme that would make the Chinese company the majority shareholder with a 45 percent stake in the Korean counterpart through purchase of new shares worth 646.3 billion won ($597.4 million).

“The Doublestar option is the best to normalize (Kumho Tire) business and prevent further losses for creditors,” Lee Dai-hyun, vice chairman of KDB, told reporters Friday.

The resurface of Doublestar card after a deal with the smaller Chinese tire maker flopped late last year came as a surprise as creditors which have been rolling over 1.3 trillion won debt this week talked of the option of sending Kumho Tire to the bankruptcy court.

Under the new terms, Kumho Tire will issue rights offering and allocate 646.3 billion won worth at 5,000 won apiece to Doublestar. Once rights offering are done, Doublestar would become the largest shareholder in Kumho Tire, while creditors’ interest would be reduced to 23.1 percent from 42.1 percent.

The price tag has significantly been lowered from the Chinese company’s original bid of 955 billion won for the 42.1 percent stake held by creditors. The bidder shaved the offer to 800 billion won upon the worsened business conditions in the third quarter. The exclusive negotiation formerly ended in December.

In the renewed bid, Doublestar vowed to guarantee the existing workforce for three years. The Chinese company cannot sell its stake for three years and creditors for five years. Doublestar also must stay the largest shareholder of Kumho Tire until creditors sell their stake.

It remains unclear whether the deal pending approval from the government could finalize as Doublestar is strongly protested by the union and the residents of Jeolla Province where the plants are based.

By Kim Jung-hwan

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]