Qingdao Doublestar’s finances are now in doubt after the Chinese tiremaker reportedly took out a large loan and set up a consortium to acquire the 42% controlling stake in Kumho Tire, Korean media reports.

Additionally Kumho Asiana Group Chairman Park Sam-Koo, who was originally denied the ability to form a consortium to buy back the Korean tiremaker, has been given more time submit his financing plan for creditor review.

Where’s the Cash?

Media further reports that Doublestar has formed a five-member consortium with Qingdao-based investment firms for a combined 223 billion won (about $194.11 million) of the 720 billion won (approximately $826 million) deal to acquire Kumho. It is said that banks will leverage the remaining to cover the difference between purchase price and funds raised.

With this plan, Doublstar is looking to pay around 35 billion won (approximately $300,000) in interest annually at a 5% minimum interest rate. According to media, there are concerns that Doublestar may not be able to pay this off – Doublestar’s net profit was 9.6 billion won in 2015 and other consortium members reportedly may have insufficient cash reserves.

If this is true, Kumho Tire would take on Doublestar’s debt after the acquisition deal is closed.

“It is likely that Kumho Tire would have to shoulder Doublestar’s financial burden during the buyout process, considering its cashable assets are only worth 179 billion won,” according to the rating agency Korea Ratings, which was responsible for lowering Kumho Tire’s credit assessment in January from A- stable to A- negative.

Doublestar, however, has said its revenue fell when the company had to drop its plant operation rate 40% to focus on updating and inspecting its facility. “The creditors have already conducted due diligence and no problem has been found,” a Doublestar official told Korean media.

Park’s Plan

Park now has until April 19 to submit a detailed financial plan to creditors, who will determine if Park can exercise his right of first refusal to repurchase the Kumho Tire stake through a consortium.

Park has threatened legal action if the main creditor, the Korea Development Bank, doesn’t allow him to form a consortium to bid for the tiremaker.

“We sent a notice to the KDB asking to give an answer to our inquiries by April 17, including the formation of a consortium,” the group said.

Creditors have been reluctant to allow Park to create a consortium to buy back Kumho because many believe Park will not be able to get the funds needed.

If Park’s plan is denied and he takes legal action against Kumho creditors, Kumho Asiana has said a court injunction against the proposed sale of Kumho Tire to a Chinese firm’s consortium led by a Chinese firm will probably appear in the legal measure.

The Kumho deal has been in limbo waiting on Park’s bid since creditors signed a deal earlier this month to sell Kumho tire to Doublestar. The creditors have said they will move forward with the sale to Doublestar if Park does not formally give them a decision.