‘Drastic measures’ threatened in Kumho Tire brand dispute
While Park Sam-koo won’t bid to acquire the Kumho Tire shareholding currently held by its creditors, he already holds one particular asset, and he’s not willing to simply let go of it. Through subsidiary Kumho Industrial, the Kumho Asiana Group chairman controls rights to the Kumho brand name. Park is prepared to allow whoever acquires the 42.01 per cent share in Kumho Tire to use the Kumho name – provided they pay for the privilege. This is a point that will likely complicate any potential sale.
Usage of the Kumho name was on the agenda when Park met with Lee Dong-geol, chairman of main creditor Korea Development Bank (KDB), on 25 September. The creditors claim the Kumho Asiana chairman promised free use of the Kumho name to whoever acquires the share, and this thought was surely in mind the next day when KDB and other creditor banks announced their plan to place Kumho Tire under a creditor-managed workout programme.
Officials from Kumho Asiana tell a different version of events. They say Park didn’t offer use of the Kumho name for free, rather he would permit its use for a fair price, most likely a royalty of 0.2 per cent of revenue in line with that paid by other Kumho units.
South Korean English-language newspaper The Korea Times reported several days ago that KDB had written to Kumho trademark holder Kumho Industrial on two occasions, asking it to confirm that the brand would be offered for free use. No reply was forthcoming.
“In order to complete due diligence on Kumho Tire and draw up its rescue plan in December, we need to straighten up all the issues concerning use of the Kumho brand,” The Korea Times quoted a KDB official as saying. “As the Kumho chief promised in September, Kumho Group must allow the free use of the trademark for an entity that acquires the tyre maker. If he doesn’t keep his promise, we will have no choice but to take drastic measures.” The official didn’t elaborate on what scenarios the word ‘drastic’ may cover.
One measure the KDB has already taken is its decision not to award Park KRW 2.2 billion (£1.5 million) in severance pay for the more than 13 years he served as chief executive officer of Kumho Tire. Quoting the KDB official, The Korea Times wrote: “He (Park Sam-koo) has failed to turn the company around and should be held responsible for its trouble. So, we decided to suspend the severance pay.”