Kumho Tire creditors will deliver a trademark use contract to Kumho Industrial and enter into a contract finalization process this week. The deadline for signing the contract set by creditors is the end of this month.
According to the financial and industrial world on August 13, the creditors will send a Kumho Tire trademark use agreement to Kumho Industrial earlier this week and ask Kumho Industrial to sign the contract by the end of this month.
The creditors accepted trademark use conditions demanded by Park Sam-koo, chairman of the Kumho Asiana Group (0.5% of annual sales as using fees and 20 years of mandatory use) in a blitz at the end of last month. A trademark contract was signed with Double Star under the condition of ‘obligatory 0.2% for five years plus an optional use for 15 years'.
Instead, if the creditors make up for a difference of up to 270 billion won in line with Kumho Industrial’s demand, Kumho Tire will pay an additional fee to Kumho Industrial every year. This was applied to a trademark agreement that Kumho Industrial and Kumho Tire will make. The creditors' contract deadline for Kumho Industrial is the end of this month. Kumho Industrial should decide whether or not they will accept the contract after reviewing it by the deadline.
At present, there are many opinions that Kumho Industrial has few justifications to refuse a trademark contract as the creditors accept all of demands by Kumho Asiana Group chairman Park Sam-koo. But some say that Kumho Industrial may refuse to seal the deal with a logic that the creditors virtually cut down on the price of Kumho Tire for Double Star over the creditors' method to make for a difference.
If Kumho Industrial accepts the trademark contract, Kumho Tire will be sold to Double Star. Otherwise, the sale of Kumho Tires may be aborted and a situation may go out of control. If creditors' support is suspended, Kumho Tire will have to go through a workout or a court receivership.
It is highly likely that the creditors will take proper follow-up measures by defining the failure of the trademark negotiation as a disruptive act. As professed, the creditors is highly likely to bring a halt to transactions with affiliates of the Kumho Asiana Group. In the financial sector, some experts say that the sell-off of all of stakes (5.9%) in Asiana Airlines held by the Korea Development Bank on September 9 is the first signal. It is also expected that chairman Park will be stripped of control of Kumho Tire and the right to demand a purchase.
The creditors have a plan to implement the remaining termination procedure based on the assumption that the contract will be concluded. In addition to the trademark contract, the process of approving the acquisition of Kumho Tire’s defense division, which is a major prerequisite, will start this week. Double Star is planning to hand in an application for the takeover of Kumho Industrial to the Ministry of Commerce, Industry and Energy to ask the ministry to approve the deal. Kumho Tires' defense division accounts for only 0.2% of total sales so it is expected that it will be decided whether or not the approval will be gained by the deadline for the sale (September 23).