The U.S. subsidiary of South Korean tire manufacturer Kumho Tire lined up $270 million in syndicated loans to finance a new tire plant in Macon, Georgia, with assistance from a team of Ballard Spahr public finance attorneys.
Kumho—South Korea's second-largest tire manufacturer—expects to start production early next year at the $424 million factory, which can produce 4 million tires each year and will supply manufacturers such as Chrysler, Kia, and Hyundai. Kumho Tire USA relocated its corporate headquarters from California to Atlanta earlier this year in order to be near the new plant.
Han C. Choi, the managing partner of Ballard Spahr’s Atlanta office and leader of the firm’s Korea Initiative, acted as counsel to Kumho Tire Georgia and co-bond counsel. Partners Randall J. Towers in Philadelphia and Tracy S. Plott in Atlanta worked on the financing deal, along with associate Stephanie S. Kim in Atlanta.
The project was announced in 2008, but stalled due to the recession. To meet business timelines it had set for itself, Kumho started construction on the plant before assembling the loans, using its own equity to finance construction. It will use the loan transactions to reimburse itself.
Three different lending groups put together the $270 million in loans, which included $160 million in taxable industrial development bonds issued by the Macon-Bibb County Industrial Authority. Bank of America Merrill Lynch sold the variable rate municipal bonds, which are secured by a letter of credit from the Korea Development Bank.
The other two lending facilities also were syndicated. One was led by a Korean bank, and the other by a Korean insurance company that partnered with a European bank.