Kumho Tire stake sale may fail without Doublestar Partial stake sale by Chinese firm likely to help expand pool of potential buyers

Translated by Ryu Ho-joung 공개 2021-06-14 07:40:40

이 기사는 2021년 06월 14일 07:37 더벨 유료페이지에 표출된 기사입니다.

Creditors of Kumho Tire are considering selling their minority shareholdings in the tire maker, with attention being paid to whether Doublestar, Kumho Tire's largest shareholder, will join them.

Nine banks including Korea Development Bank and Woori Bank, which together own 23.11% of Kumho Tire, are in discussions to sell their stake in the second half of this year, industry sources said.

Kumho Tire swung into a profit in the first three months of 2021 and its financial position is expected to further improve this year. The company’s stock price is also trending upward.

The once-ailing company was acquired by Chinese tire maker Doublestar in July 2018, which bought 646.3 billion won ($581.2 million) in fresh shares, equivalent to a 45% stake. Under the agreement, Doublestar and creditors cannot sell their shares in Kumho Tire for certain lock-up periods.

The lock-up period for creditors’ shares will end in early July, which will allow them to sell half of the 23.11% stake first and divest the rest after a year. Doublestar has to keep its shares for five years, a longer lock-up period of three years for creditors, or until creditors divest all of their shares in Kumho Tire.

But many are skeptical about whether creditors will find a buyer, as few investors are likely to want to buy a minority stake which does not give control of the company. Some strategic investors such as Kumho Petrochemical, which was named as a potential buyer of Kumho Tire, are reportedly not interested in this stake sale for that reason.

Doublestar joining creditors to sell a partial stake in the company could attract more interest from investors seeking to acquire Kumho Tire, expanding a pool of potential buyers, industry watchers said. They added that creditors and Doublestar could revise their agreement on the lock-up period if the Chinese company is willing to sell its stake in phases alongside creditors’ shares.

“It would be practically difficult for creditors to find a buyer of their monitory stake in Kumho Tire, whose largest shareholder is a Chinese company,” said an industry insider. “They will need to discuss the sale with Doublestar.” (Reporting by Su-jin Yoo)
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