De Facto Refusal
Kumho Industrial accepted creditors’ request for use of its trademark rights on June 9, while claiming that 0.5% of sales should be paid in return and cancellation should not be allowed. this constitutes a de facto refusal, according to industry sources.
Kumho Industrial’s, that is, chairman Park Sam-koo’s, offer significantly differs in terms of the rate and right to cancellation fro According to industry sources, m its agreement with the creditors and Doublestar Tyre according to their stock purchase agreement signed in March this year. The creditors and Doublestar have demanded a rate of 0.2% with cancellation on a prior notice basis. Assuming that the sale is carried out as proposed by the chairman and Kumho Tire’s sales are three trillion won, Doublestar has to pay 15 billion won a year for 20 years.
Kumho Tire is the last piece of the puzzle for the chairman to rebuild its cherished group. Letting the creditors and Doublestar use the trademark rights as they wish means giving up on the acquisition on his part, and thus he cannot opt for it.
Conflicts between the two sides are likely to heat up again due to the split opinions. Under the circumstances, the decision on whether to extend the maturity of Kumho Tire’s loan, which was planned to be made on June 15, is likely to be put off. Earlier, the Korea Development Bank (KDB) began to discuss, with the others in the creditors’ association, the extension to September of the maturity of the 1.3 trillion won loan maturing late this month.
Things may get awkward for the chairman if the creditors refuse to do so and file for receivership of Kumho Tire. First of all, his control of the entire group can be threatened in that case because the chairman already provided shares of Kumho Holdings, the holding company of the group, as collateral for the Kumho Tire creditors.
As the case may be, the creditors can recover the chairman’s right of first refusal and put pressure by dismissing the management of Kumho Tire including the chairman. Still, the creditors’ and the Kumho Asiana Group’s opinions are divided on whether the exercise of rights on the trademarks constitutes business interruption, which is a precondition for the recovery of the right of first refusal. According to the creditors, delayed selling related to the trademark rights problem constitutes business interruption. According to the group, however, it is an appropriate exercise of rights. Another controversy consists in the legitimacy of depriving him of his rights as an individual with the trademark rights belonging to Kumho Industrial.