No Further Step
Kumho Asiana Group and the Korea Development Bank (KDB) are likely to have a legal battle for the sale of Kumho Tire.
Kumho Asiana Group raised a question on March 31 over the notification standard of the sales terms of Kumho Tire. The notification of the sales terms is directly connected with the period that Kumho Asiana Group Chairman Park Sam-koo can exercise his right of first refusal for Kumho Tire. The group pointed out that the sales terms notified from creditors do not include key issues, such as the trademark rights of Kumho Tire, debts of Kumho Tire and contract details of a stock purchase agreement (SPA) with Doublestar. Since the meaning of “sales terms” is very comprehensive, the two sides are poles apart in the interpretation. In short, there are no clear standards of sales terms so it can lead to a legal dispute. The group repeated its previous stance that it will take legal action against the KDB when the main creditor bank pushes ahead with the sale of Kumho Tire to Doublestar.
The KDB did not budge. An official from the KDB said on the same day, “If Kumho Asiana Group Chairman Park doesn’t decide whether to exercise his right of first refusal by April 19, we will proceed with the sale procedure with Doublestar according to the contract.” When Park doesn’t make the decision by the due date, Kumho Tire will be sold to Doublestar.
Currently, the KDB and Kumho Asiana show a clear difference in views over the period that Park can exercise his right of first refusal for Kumho Tire. Creditors, including the KDB, think that they officially informed Park on the terms of the SPA with Doublestar on March 14. Park should decide on whether to exercise his right of first refusal within 30 days, which is April 13. However, creditors set the due date to April 19 considering the fact that Park received the SPA signed between creditors and Doublestar on March 20.
But, Kumho Asiana Group thinks differently. The group said that the countdown for 30 days has not even started because it has not been informed of accurate terms of the sale. An official from Kumho Asiana Group said, “We received an official document from the KDB a day earlier that Chairman Park should make a decision on whether to exercise his right of first refusal by April 19. The notification is not the confirmed terms of the sale so he is not obliged to make the decision until then. The period to exercise the right of first refusal should start from the day when a company receives the terms of stock sales with three confirmed conditions.”
Kumho Asiana Group is likely to gear up for a legal fight over the acquisition of a controlling stake in Kumho Tire unless the two sides fail to narrow the difference in views. In fact, the group is said to be considering an injunction against the KDB not to sell shares of Kumho Tire and lawsuits to investigate the appropriateness of the sale procedures. It takes only one to two months until the court gives its ruling over the injunction against the sale of Kumho Tire. However, the two can face three trials for the lawsuits, the sale of Kumho Tire can be delayed until next year. If the KDB doesn’t’ change its stance, Kumho Asiana Group can file for a suit against the bank earlier than expected.