Kumho Tyre brand dispute near resolution.
Creditors of Kumho Tyre have tentatively agreed to accept the original proposal by the tyre maker’s parent group to resolve a brand dispute with Chinese buyer Qingdao Doublestar, South Korean media have reported.
State-run Korea Development Bank, the main creditor, is expected to finalize the deal on Friday, July 28. The agreement should pave the way for creditors to complete the stalled sale of Kumho Tyre to the Chinese tyre company, according to news sources.
Qingdao Doublestar signed a 955 billion won ($852 million) deal in March to acquire a 42% stake in Kumho Tyre, but the process broke down over how much the Chinese company should pay for the use of the Kumho brand name. Under the initial proposal by Kumho Tyre’s parent group, Kumho Asiana Group, Qingdao Doublestar would be required to pay 0.5% of its sales as a brand usage fee to Kumho Asiana Group for 20 years.
Qingdao Doublestar originally countered and said it would pay 0.2% for five years. While accepting the original proposal by Kumho Asiana, the creditors have agreed to give a financial incentive to the Chinese company for the brand usage fee. With Kumho Tyre’s annual sales of about 3 trillion won, the difference of 0.3% is being estimated at around 9 billion won, according to creditor bank officials. Creditors, which hold 2.2 trillion won in Kumho Tyre bonds, could offer the Chinese company an extension on the maturity of their bonds.