Real Intention?
Kumho Asiana Group Chairman Park Sam-koo officially declared that he has no intention to reacquire Kumho Tire. He seemed to hold an unscheduled press conference in order to settle a conflict with the Korea Development Bank (KDB) as soon as possible. As Kumho Tire's main creditor KDB has had a conflict with the group over the use of the Kumho Tire brand and the merger with transportation service provider Kumho Buslines, the bank is putting more pressure on the group with affiliates’ liquidity checks.
“I totally gave up plans to acquire Kumho Tire. I am not interested in the acquisition,” said Park at the press conference at the Kumho Asiana’s head office n Gwanghwamun, Seoul, on November 28. “Kumho Asiana Group will instead focus on Kumho Buslines, Kumho Terminal, Kumho Industrial and Asiana Airlines to strengthen its capability and reconstruct the group.”
Some raise a question about the veracity of Park’s announcement to not to reacquire Kumho Tire. This is because he can seek to reacquire Kumho Tire again in the future as he has left room with the Kumho Tire trademark.
First of all, the KDB reportedly took a negative stance against Kumho Holdings, a de facto holding company of Kumho Asiana Group, merging with Kumho Buslines. The bank expressed concerns that the merged entity can see its financial stability become worse and its credit rating fall.
However, Kumho Asiana Group pushed ahead with the merger despite the KDB’s concerns and completed the merger between Kumho Holdings and Kumho Buslines on the 27th. Accordingly, some say the KDB will not extend the repayment of 50 billion won (US$46.21 million) worth of the group’s bonds that will mature next year.
At the press conference, Park denied the recent rumors over the conflict with the KDB and expressed his intention for an amicable settlement. He said “We don’t have a bad relationship with the KDB. We can have a slight disagreement but there is no misunderstandings by the KDB.”
Park also stressed that there would be no problem with financing for 50 billion won (US$46.21 million) worth of its bonds. He said, “We didn’t get a clear repayment notice from the KDB. We are all prepared for refinancing because we hold the security.”
In addition, some say Park can try to reacquire Kumho Tire in the future as he turned down the KDB’s request to allow the use of the Kumho brand for free in order to re-sell Kumho Tire. Regarding to the Kumho trademark rights, Park said, “We will provide full support to areas that don’t have legal problems and make an arrangement within legal limits.”
Kumho Asiana Group refuses to allow the use of the Kumho brand at no cost because the trademark is the property rights of the group. If the group fails to reach an agreement on the issue with creditors, including the KDB, it is highly likely to face a legal battle. When the legal war starts, the re-sale of Kumho Tire can be delayed for a long time.
Others say Park can raise money to reacquire Kumho Tire while using the trademark rights as a wildcard because the contract to sell Kumho Tire to Doublestar was canceled last time due to the use of Kumho brand.
Meanwhile, Kumho Industrial and Kumho Petrochemical are having a legal battle on which has the right holder of Kumho brand. Kumho Group adopted a two holding company system and registered its trademark rights, including Kumho brand, under the name of both Kumho Industrial and Kumho Petrochemical in 2007.