Can Kumho Chairman Outmatch Double Star Tyres?

Kumho Asiana Group Chairman Park Sam-koo is attracting keen attention from investors and business circles about whether he will exercise his right to buy back a 42.1 percent stake in the group's tire unit, according to industry analysts Thursday.

To take back control of Kumho Tire, Park must pay more than what Double Star Tyres said it would pay. The Chinese tire maker reportedly offered to pay between 950 billion won ($819 million) and 1 trillion won for a controlling stake. Given the firm's market capitalization of 1.33 trillion won, the 42.1 percent stake is valued at about 560 billion won. But including management premiums, creditors had expected the stake sale could reach as high as 1 trillion won.

But the chairman appears to be short of cash as he already spent tens of billions of won in personal wealth to buy back control of Kumho Industrial and to increase his shares in other group units.

Park won't be able to acquire the stake through a third party because the creditors decided not to permit Park to transfer a prior stock purchase right to a third party. He cannot mobilize Asiana Airlines or other group units either to reacquire the tire unit, meaning that he has to use his personal funds to take back Kumho Tire.

On Jan. 17, the state-run Korea Development Bank (KDB) and other creditors selected Double Star Tyres as a preferred negotiator, which outbid two other Chinese contenders; Shanghai Aerospace Industry Corp. (SAIC) and Jiangsu GPRO Group.

The creditors plan to sign a stock purchase agreement (SPA) with Double Star Tyres in late February, and inform the Kumho chairman of the sales price and other conditions. Park will then have to let the creditors know whether he will pay a higher price or give up his right within 30 days.

The banks acquired the stake in a debt-to-equity swap in 2010 when the company suffered a severe liquidity shortage. At the time, they signed an agreement that they would first negotiate with the Kumho chief when unloading their Kumho Tire stake.

He has consistently been saying that he will take all possible measures to buy back the 42.1 percent stake in Kumho Tire. But he has declined to elaborate on how he would...