Kumho Tire Co. could be headed toward bankruptcy court if Kumho Asiana Group doesn’t give Qingdao Doublestar trademark rights for Kumho Tire, The Korean Herald reports.
As the preferred bidder of Kumho Tire, Doublestar is poised to pay 955 billion won ($831 million) to acquire the majority of Kumho Tire shares. The current agreement between Doublestar and Kumho Tire creditors, allows the Chinese tiremaker to use the Kumho Tire brand for 20 years.
However, Kumho Asiana Group and its chairman Park Sam-Koo do not agree with the terms and could keep Chinese tiremaker from using the Kumho brand logo, which is owned by Kumho Industrial Group. A spokesman for Kumho Asiana told The Korean Herald the group would consider allowing Doublestar to use the Kumho name for five years “provided that a reasonable agreement is reached.” So far there have been no negotiations.
Kumho Tire creditors told The Korea Times in a previous article that Doublestar wont’ buy Kumho Tire if it can’t use the Kumho trademark.
If Park and Kumho Asiana do not make a decision on how to give Doublestar Kumho trademark rights, the Kumho Tire will have to pay back 1.3 trillion won ($1.16 billion) of debt at the end of June.
If a deadline extension is not made, Kumho would have to go under court receivership, The Korean Herald said. Creditors will vote on a three-month extension in early June. The three-month extension would be temporary until Doublestar completes the deal, which is based on a five-year debt extension.
If brand rights are not decided on and Doublestar does not purchase the controlling stake, the company will lose its preferred bidder status, giving Park a new pre-emptive right to buy Kumho Tire shares.