Kumho Tire creditors propose brand name rights compromise
It’s more than two months since Qingdao Doublestar Tire was named the preferred bidder to acquire a 42.01 per cent share in Kumho Tire, yet a satisfactory agreement remains elusive. The most contentious point has been the use of the Kumho brand name, with rightsholder Kumho Industrial demanding 0.5 per cent of Kumho Tire’s revenues for 20 years for use of the name – significantly more than the 0.2 per cent for five years as previously agreed between Doublestar Tire and Kumho Tire’s creditors.
On Friday main creditor, Korea Development Bank (KDB), and other creditors agreed to approach Kumho Industrial with a compromise of 0.5 per cent of revenues for twelve and a half years. The Seoul-based daily adds that the creditor banks have also given Kumho Tire’s management a “failing grade” for the second year in a row, a measure that would enable a reshuffle of the tyre maker’s senior management.
According to The Korea Times, the creditors expect an answer from Kumho Industrial chief executive Park Sam-koo by 13 July. Park, who as chairman of the Kumho Asiana Group had first right of refusal on the 42.01 per cent Kumho Tire sake, rejected the creditors’ initial proposal for brand usage after his own attempts to fund an acquisition of the shareholding were frustrated. Should Doublestar Tire’s purchase of the shareholding not go ahead, Park would once again be first in line to do so.
According to an anonymous industry analysist quoted by The Korea Times, it will be difficult for Park to reject the creditors’ latest offer. The analyst opined that he “doesn’t have much ground to dismiss the latest proposal,” adding that the creditors’ decision to give Kumho Tire’s management another poor rating is a “clear warning” that if the shareholding isn’t sold to Doublestar Tire, they will “take managerial control away from Park.”