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Shares of South Korean tyre maker Kumho Tire surged on Tuesday morning on a media report that it could be acquired by a local conglomerate, fueling hopes for its survival.
The shares jumped 8.5 per cent to Won4,155 in mid-morning trade after rising as much as 15.7 per cent after the Korea Economic Daily said a local conglomerate is interested in buying the embattled tire maker through a rights offering.
But its main creditor Korea Development Bank said it was not in talks with any potential buyer. The loss-making tyre maker has been struggling to stay afloat under mountains of debt after its Won955bn ($835m) sale to China’s Doublestar fell through in September.
Its shares plunged by the daily limit of 30 per cent last Thursday on the growing possibility that the company could be placed under a short-term court receivership. KDB and other creditors are now conducting due diligence on Kumho to put it up for sale again.
This will be the first case of major corporate restructuring under South Korea’s new president Moon Jae-in, who has made job creation his top economic policy. Creditors have lent Kumho Won3.9tn since it entered restructuring in 2010.
South Korea has pledged repeatedly to reform marginal companies but has failed to make much progress on concern about job losses, analysts say. Lee Dong-gull, KDB’s chairman, has pledged to restructure Kumho in a way that protects jobs.