Has Kumho chief raised 955 billion won?

Park Sam-koo, Kumho Asiana Group chairman

By Lee Hyo-sik

Kumho Asiana Group Chairman Park Sam-koo has been attracting keen attention from business circles as to whether he has raised the nearly 1 trillion won needed to buy back a 42.1 percent stake in the group’s tire unit, according to industry analysts Wednesday.

Kumho officials have said Park has successfully secured sufficient funds to take back control of Kumho Tire. But some analysts continue to remain skeptical about the claim, arguing that it wouldn’t be easy for the chairman to raise the huge sum of money as an individual without mobilizing Asiana Airlines and other group units.

With the chairman’s financial standing still in question, the Korea Development Bank (KDB) and other creditors plan to sign a stock purchase agreement (SPA) today with Double Star Tires, a mid-tier Chinese tire maker, which made an offer to acquire the Kumho Tire stake for 955 billion won ($838 million).

“If everything goes smoothly as planned, we will likely be able to sign the sales contract Friday,” a KDB official said.

Once the contract is sealed, the creditors will inform the Kumho chairman of the sales price and other conditions. Park will then have to let creditors know within 30 days whether he will pay a higher price or give up his right to buy the company back.

If the chairman decides to exercise his right, he will have to pay 95.5 billion won, 10 percent of the contract price, and make public his fundraising scheme.

“Park has raised the necessary amount of money from financial investors so he can take back control of Kumho Tire when the time comes,” a Kumho Asiana official said. “What he is trying to do now is to attract strategic investors to secure funds on more favorable terms.”

The Kumho chief reportedly has to pay higher interest and accept other unfavorable conditions if he borrows money from banks, brokerages and other financial institutions. This is why he has been trying to draw funds from business partners and other corporate entities that are willing to lend him money on more favorable terms.

However, an industry official, who declined to be named, said it wouldn’t be easy for the chairman to convince investors because he cannot provide any collateral.

“The thing is the Kumho chief has to use his personal funds to acquire the stake, but he is short of cash after spending tens of billions of won buying back control of Kumho Industrial and increasing shares in other group units,” the official said.

“He is not allowed by creditors to buy the stake through a third party or mobilize Asiana Airlines and other group units, leaving him with no choice but to raise money as an individual,” he added. “Although Park is the head of one of the country’s major conglomerates, I don’t think it would be easy for him to attract nearly 1 trillion won.”

KDB and other banks acquired their stake in a debt-for-equity swap in 2010 when Kumho Asiana suffered a severe liquidity shortage. They then signed an agreement to negotiate first with Park when unloading their Kumho Tire stake.
Besides four plants in China, Kumho Tire operates three plants in Korea and one each in Vietnam and the United States. In 2016, the company had 2.95 trillion won in sales and posted a 120 billion won operating profit.

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