Creditors of South Korea’s Kumho Tire Co. embarked on the sale process of their combined 42.01 percent stake in the country’s second largest tire company that could value as much as 1 trillion won ($892.9 million).

The creditors including Korea Development Bank officially announced on Tuesday they will start to accept bids through sale advisor Credit Suisse. According to the plan, a preliminary bid is expected to take place in November and the main auction in around January next year. A total 42.01 percent stake, or 66,368,844 shares, in Kumho Tire is put up for sale and market analysts estimate that the stake currently worth about 750 billion won can soar up to 1 trillion won including management right premium.

As Kumho Tire, Korea’s second largest and the world’s 12th largest tire company in terms of sales, has production lines and sales network in foreign countries, it is expected to attract a number of global auto-related companies to its auction.

Potential candidates include Japan-based tire company Bridgestone Corp., France-based tire company Michelin and Japanese tire company Yokohama Tire Corp. Eyes are also on whether Kumho Asiana Group Chairman Park Sam-koo would participate in the takeover battle. Park has the right of first refusal, which allows the holder the priority to repurchase management control under the same terms with any highest bidder.

Market observers believe that Park lacks funds to buy back the tire maker after spending 722.8 billion won to take over Kumho Industrial Co. last year.

However, Park Sam-koo who is strongly willing to rebuild his empire after regaining control of Kumho Industrial may give up the right and join the bid with funds he would scrape together from a variety of sources, industry observers predicted. Chairman Park may raise funds by forming a consortium or establishing a special purpose company to participate in the final bid.

By Kim Hyo-hye

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