The race for the controlling stake in Kumho Tire Co., South Korea’s second largest tire company, drew more and eager bidders than expected, possibly raising the price tag to near $900 million to deal as good news for creditors but bad for its former owner, the chairman of Kumho Asiana Group who had hoped to redeem the tire maker that his father founded.

According to finance industry sources on Thursday, a total of 10 companies from home and abroad including a major global tire maker handed in letters of intent for a 42.01 percent stake in Kumho Tire owned by a group of creditor banks including government-owned lenders Korea Development Bank and Woori Bank.

Insider said one of four international tire names - Japanese Bridgestone Corp., France-based Michelin, Germany-based Continental Tire., and U.S-based Goodyear Tire & Rubber Company - was included in the bid for the tire maker that is second in the country and 12th in global rank in terms of sales as well as foreign auto parts maker and chemical maker. A financial investor in partnership with foreign funds also joined the bid.

Bids rushed in right before the closing of the preliminary auction and the creditors meeting that was to be held on Thursday to draw up a shortlist had to be pushed back to next Monday, said a creditor bank official who asked to be unnamed.

The preliminary bid offers were fairly high considering the poor global tire market conditions, added the official.

The 42.01 percent stake in Kumho Tire is worth about 663 billion won ($568 million) based on Thursday’s closing price with 10,200 won apiece. Industry watchers predict the shares could fetch between 900 billion won and 1 trillion won with an addition of management premium worth up to 300 billion won. As of 1:40 p.m. on Friday, shares of Kumho Tire rose 2 percent to 10,250 won from the previous trading day.

This is all bad news for Kumho Asiana Group Chairman Park Sam-koo who has been planning to exercise his right of first refusal that would allow him to repurchase the stake under the same terms of the highest bidder to retrieve the company he had to surrender to creditors in 2010 due to group-wide liquidity crisis.

It remains unclear whether he can afford the hefty repurchase cost, having spent 722.8 billion won last year to take over Kumho Industrial Co.

Kumho Tire’s main creditors are Woori Bank, Korea Development Bank (KDB) and KB Kookmin Bank who gained the control of the tire maker when it entered a workout program in December 2009. Woori Bank owns 14.2 percent stake in Kumho Tire, KDB 13.5 percent, and KB Kookmin Bank 4.2 percent.

By Kim Jung-hwan and Hong Jang-won

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