SEOUL– Creditors of Kumho Tire Co. said Tuesday they decided to reject a demand by China’s Qingdao Doublestar to cut its bid price for a controlling stake in the South Korean tiremaker.
If Doublestar expresses its willingness to renegotiate with creditors about the price, both sides can resume talks. If not, the contract to sell Kumho Tire to Doublestar will be canceled.
The decision came after a meeting of the creditors, led by state-run Korea Development Bank, earlier in the day.
Doublestar signed the 955 billion-won (US$844 million) contract with the creditors in March to buy a 42.01 percent stake in Kumho Tire.
After months of a bitter dispute over the use of Kumho Tire’s brand, the Chinese company submitted documents in early August for approval from the South Korean government in what appeared to be a final step to complete the acquisition.
However, Doublestar has demanded the creditors cut the price by 16 percent to 800 billion won, adding a new twist to the Chinese firm’s bid to acquire Kumho Tire.
An official at one of the creditors said negotiations with Doublestar broke down because the Chinese tiremaker made an “unreasonable demand.”
A source close to the matter added that Doublestar demanded the creditors make up for losses if Kumho Tire reports losses.
Besides the price, the creditors and Doublestar have remained far apart on other issues, including job security for Kumho Tire employees, the source said.
Also on Tuesday, the creditors asked Kumho Tire to present a self-rescue plan.
If the self-rescue plan is insufficient, the creditors will begin a procedure to sack Park Sam-koo, chairman of Kumho Asiana Group, which is the parent of Kumho Tire.
Source: Yonhap News Agency