Entering into Core Issue
Kumho Asiana Group began negotiations with creditors on the use of trademark rights of the Kumho brand, which holds the key to the sale of Kumho Tire. However, all eyes are on whether the two sides can reach an agreement as they are polarized on the issue.
According to industry sources on May 30, Kumho Group held a meeting on the trademark rights with Korea Development Bank (KDB), the major creditor of Kumho Tire, in private on May 29. It was a kind of pre-negotiation among working-level department heads to discuss over the future direction of trademark rights before official talks. Creditors first suggested the meeting to Kumho Group.
Kumho Group maintained its previous stance that it would allow China’s Doublestar, which is a preferred bidder of the sale of Kumho Tire, to use the trademark rights of the Kumho Tire brand for five years when there is an agreement in advance. The KDB plans to announce its official position on the issue after internal discussion in a shareholders meeting. The state-run bank offered terms of 20 years – the first five years of the mandatory period of the Kumho trademark use and additional 15 years of the voluntary period – through a stock purchase agreement (SPA). It shows how much they differ in the issue.
Previously, the KDB also guaranteed that the Chinese company can use the Kumho trademark for 20 years if it paid 0.2 percent of Kumho Tire's sales as brand royalties. However, Kumho Group said it cannot accept the rate of 0.2 percent to sales at the negotiation. In particular, the group is opposed to the long-term contract because it is hard to manage the brand image when a company other than Kumho Group uses the trademark rights of the Kumho brand for a long time.
An official from the industry said, “Creditors should be more aggressive in talking over the trademark rights in order to finalize the sale of Kumho Tire with Doublestar by the end of September. Kumho Group has been on the advantage in the sale to Doublestar.”