Claim of share price manipulation made against Kumho Asiana chairman

The chairman of Kumho Tire’s parent company has been accused of manipulating the price of Kumho Industrial shares ahead of a planned majority shareholding sale. Drawing its information from “the industry”, Business Korea reports that a certain Mr. Kang has sued Kumho Asiana chairman Park Sam Koo and 20 other Kumho executives for professional malpractice, violation of the financial investment laws (including insider trading) market price manipulation and unfair trading, and bid interference.

Bidding is currently underway for a 57.5 per cent share in Kumho Industrial, with bids accepted until 28 April. The sale of this share will complete the debt restructuring of Kumho Industrial that began in 2010 after Kumho Asiana experienced financial difficulties. Several parties, including Seoul-based private equity firms MBK Partners and IMM, have submitted letters of intent to buy the share and Business Korea states that Kang, who holds 2,300 shares in Kumho Industrial, claims Mr. Park intentionally tried to lower the Kumho Industrial share price to push the winning bid as low as possible. Park Sam Koo holds a first right of refusal option that would allow him to buy a 50 per cent stake plus one share in Kumho Industrial by matching the price of the preferred bid.

Mr. Kang is also said to have raised concerns about stock price manipulation using confidential information. On 26 February, following the publication of news that South Korean retailer the Shinsegae Group’s had submitted a letter of intent to acquire the abovementioned share, Kumho Industrial president Won Il-woo sold 3,000 shares, while Kumho Engineering and Construction’s vice-president and director each sold 2,000 shares – and all made a profit. When the Shinsegae Group stated the following day that it was not bidding for a stake in Kumho Industrial, the share price dropped 13.3 per cent. Kang presented the list of share sales by Kumho executives from November 2014 to February 2015 as evidence of these transactions.

This news from Business Korea comes only a week since two Kumho Tire co-CEOs – one of them Park Se-chang, son of Kumho Asiana chairman Park Sam Koo, resigned only three days after their appointment. Park junior’s resignation is said to have followed demands to this effect from Kumho Tire’s major creditors. Kumho Asiana has allegedly sought to strengthen the Park family’s presence in Kumho Tire’s management since the tyre maker emerged  from its debt workout programme.