The agreed sale of Kumho Tire to Qingdao Doublestar fell through this week after the Chinese company reduced its offer for the South Korean tyre manufacturer.

Creditors of the country's second largest tyre manufacturer, led by the Korea Development Bank, rejected the new offer of KRW800bn (US$709m) for a 42% stake in the company which was 16% lower than the KRW955m offer originally agreed between the two parties.

Doublestar said it lowered the offer price because of falling profits at Kumho Tire, as market and operating conditions have deteriorated since it made the offer. According to local reports  the tyre maker is also struggling with a lack of liquidity.

Korea Development Bank said the new offer was unacceptable and that the sale would be cancelled if Doublestar refused to renegotiate. 

Creditors also have asked the current management team to submit a viable self rescue plan in case a new price cannot be agreed.

Chairman Park Sam-koo, chairman of Kumho Tire's parent company, Kumho Asiana Group, has since indicated he was looking to sell assets in China to help generate funds. Kumho currently has three plants in the country, in Nanjing, Tianjing and Changchun.