Kumho Tire proposal ‘tentatively’ accepted
Although it’s probably too early for champagne corks to pop, progress has been made in the Kumho Tire shareholding negotiations. Yonhap News Agency writes that the tyre maker’s creditors have “tentatively agreed to accept original proposals” made by Kumho Asiana, adding that this may pave the way for creditors to complete the sale of the 42.01 per cent shareholding to Qingdao Doublestar Tire.
Kumho Asiana originally proposed that Doublestar pay 0.5 per cent of its turnover for 20 years in exchange for the rights to use the Kumho brand name. Doublestar expressed interest in paying 0.2 per cent of turnover and only being bound to the deal for five years, with the right to extend it for a further 15.
The original proposal from Kumho Asiana was accepted on condition that the creditors provide Doublestar with financial assistance in meeting the terms – they proposed supplementing Doublestar’s annual payment of 0.2 per cent with a 0.3 per cent payment of their own. Yonhap writes that as Kumho Tire has annual sales in the vicinity of KRW 3 trillion (£2.06 billion), this 0.3 per cent amounts to around KRW 9 billion (£6.17 million) per annum. The news agency adds that the tyre maker’s creditors, which hold KRW 2.2 trillion (£1.37 billion) in Kumho Tire bonds, could offer Doublestar an extension on the maturity of their bonds.
Main creditor the Korea Development is expected to make a final decision on whether to except Kumho Asiana’s proposal by Friday.