Creditors of Kumho Tire Co. are expected to embark on the process of selling their combined 42.01 percent stake in the South Korean tire manufacturer as early as next month, and all eyes are now on whether the owner family of Kumho Asiana Group led by Chairman Park Sam-koo would regain control of Kumho Tire that was handed over to creditor banks when it entered a workout program in December 2009 due to liquidity problems.

State-run Korea Development Bank (KDB) and other creditors of Kumho Tire on Wednesday held a shareholder council meeting at the KDB headquarters in Yeouido, western Seoul. At the meeting, Credit Suisse, the sales advisor of the tire maker, reported that its feasibility study has found that a number of potential buyers at home and abroad have expressed their interest in bidding for the leading Korean tire manufacturer, creating an environment for fair competition. The creditors are expected to make a final decision on whether to put Kumho Tire up for sale in the market later this month by putting the agenda on a vote at a separate shareholder council meeting.

Among the creditors, Woori Bank has 33.7 percent voting right while KDB 32.2 percent and KB Kookmin Bank 9.9 percent. It is necessary to get consent from 75 percent or more creditors to commence the sale process of Kumho Tire. If approved, creditors are expected to officially put the tire maker up for sale in August.

Now it remains to be seen whether Kumho Asiana Group Chairman Park would exercise the right of first refusal he owns. This right gives the holder the priority to repurchase management control under the same terms with any highest bidder. Chairman Park was given the right of first refusal from creditors in May 2010, but on condition that the right does not pass on to others. This means that Chairman Park who succeeded in regaining control of Kumho Industrial Co. on support from other Kumho Asiana Group units and a number of so-called white knights by transferring the right would not be able to expect similar support this time.

Multiple sources from the investment bank industry raise the possibility that Chairman Park would give up his right of first refusal and compete with others in the bid by either forming a consortium or setting up a special purpose company, which will allow him to secure funds more easily and write down the highest price to purchase Kumho Tire.

The local brokerage industry estimates the sale price of Kumho Tire would be minimum 1 trillion won ($871 million) and even go up to over 1.5 trillion won when competition intensifies among potential bidders. Currently, Bridgestone Corporation, Michelin Group, and China National Tire and Rubber Co. are being referred to as potential buyers.

Sources note that many global industry players are eyeing on the bid as Kumho Tire is known for its world-class technology and quality products. The tire manufacturer has also built good business network in the United States and China. Kumho Tire operates nine production facilities - three in Korea (Gwangju, Gokseong and Pyeongtaek), four in China (including Nanjin, Tianjin, and Changchun), two in the U.S., and two in Vietnam.

By Chung Seok-woo, Kim Hyo-hye, Yoon Jin-ho

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