Tire Bank will complete its acquisition of a 22% stake in Air Premia (YP, Seoul Incheon) by September 30 after altering the purchasing entity and arranging financing, according to South Korean media reports. The tyre retailer is expected to pay the outstanding KRW99.4 billion won (USD71 million) balance to sellers JC Partners and Sono International by the deadline, despite earlier concerns about the completion of the deal.
A report by ChosunBiz revealed that the acquiring entity was once again changed from Making Success, a company wholly owned by the daughters of Tire Bank chairman Kim Jeong-kyu, to Tire Bank itself. Initially, the holding planned to route the acquisition via AP Holdings, a subsidiary of Tire Bank which already controls a 46% stake in Air Premia.
All up, the transaction is valued at KRW119.4 billion (USD85.2 million). The first tranche of KRW20 billion (USD14.2 million) was paid in May.
Tire Bank has reportedly sought financing for the transaction from several securities firms, requesting an interest rate in the 3% range, below the current market rate of around 5%. The company is said to have offered its extensive real estate portfolio as collateral to secure the favourable terms.
Local media have reported that Kim is managing the finalisation of the deal from prison, and that he pledged personal assets as collateral for the financing. In July, the executive was imprisoned for three years and fined KRW14.1 billion (USD10 million) for tax evasion.
According to the terms of the transaction, interest will start accruing if Tire Bank fails to make the payment by September 30. If the deal does not go through by the end of October, the current owners will have the right to cancel and seek a new buyer, and Tire Bank's initial KRW20 billion payment would be forfeited.
