April 16, 2024

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[THE INVESTOR] Creditors of Kumho Tire are considering a move to seek arbitration over a dispute brand dispute with China’s Qingdao Doublestar, financial sources said on June 20.

Doublestar signed a 955 billion won (US$839 million) deal in March to acquire a 42-percent stake in Kumho Tire, but the process of acquisition hit a snag over how much the Chinese company should pay for the use of the Kumho brand name. 

Kumho Asiana Chairman Park Sam-koo

The parent of Kumho Tire, Kumho Asiana Group, called for the Chinese company to pay 0.5 percent of its sales to use the name, while Doublestar reportedly suggested that it would pay 0.2 percent.

Creditors were considering asking Doublestar to accept the proposal by Kumho Asiana Group. In return, creditors could give a financial incentive to the Chinese company for the brand usage fee.

Given that Kumho Tire has annual sales of about 3 trillion won, the difference of 0.3 percentage point is estimated at some 9 billion won, according to creditor bank officials.

Creditors, which hold 2.2 trillion won in Kumho Tire bonds, could offer the Chinese company an extension on the maturity of bonds. The idea will be discussed at a meeting of creditors and shareholders later in the day.

By Alex Lee and newswires (alexlee@herladcorp.com)