Kumho Tire Shareholders Ready to Scrap Equity Sale

A plan to sell 42% of South Korea’s Kumho Tire Co. to China’s Qingdao Doublestar Co. appears likely to collapse, The Nikkei reports.

The companies agreed in March to the 995 billion-won ($843 million) sale. The equity involved is held by a group of creditors headed by the Korea Development Bank (KDB). They took control of Kumho in 2009 after the tiremaker overexpanded.

But Park Sam-koo, chairman of Kumho parent Kumho Asiana, soon stalled the deal in a bid to buy back the stake himself. Doublestar has since asked for a significant price cut on the sale.

KDB tells The Nikkei that Kumho shareholders have decided to reject Doublestar’s reduced offer. The newspaper adds that the Korean government has been reluctant to allow Kumho, which also makes tires for fighter jet planes, to end up under Chinese control.

KDB has advised Kumho Asiana to submit an alternate survival plan for the tiremaker by Sept. 12. If no viable alternative emerges, the bank says it will dismiss Kumho Tire’s leadership team, according to the report.