The shareholder group of South Korea’s Kumho Tire Co. announced on Tuesday that it would issue a public notice on the sale of the tire company around September 20 and invite candidates to hand in letters of intent (LOI).

The shareholder group consisting of nine financial companies including Korea Development Bank (KDB) and Woori Bank plans to accept preliminary bids around the middle of November. The final tender would take place in January next year. The shareholder group plans to select a preferred bidder in the first quarter of next year to finalize the sale. The 43.1 percent stake owned by the group would be put up for sale.

The potential candidate of the tire company is Kumho Asiana Group Chairman Park Sam-koo who has the right of first refusal, which allows the holder the priority to repurchase management control under the same terms with any highest bidder. He can decide whether to exercise the right after a preferred bidder offers a final bidding price. Kumho Tire would return to him if he can match the highest bid.

Park cannot get any financial assistance from units of Kumho Asiana Group or financial investors as the right is limited to him. Some industry watchers believe that it won’t be easy for Park to come up with up to 1 trillion won ($893 million) to buy back the tire maker, having already spent a lot to take over Kumho Industrial Co. last year.

Observers predict that Park might give up the right and raise funds by forming a consortium or establishing a special purpose company to participate in the final bid.

Other than Park, global tire companies are considered candidates. Potential bidders are Japanese Bridgestone Corp., France-based Michelin and Germany-based Continental Tire.

By Kim Hyo-hye

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