Doublestar rejects new Kumho fee

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Doublestar rejects new Kumho fee

The Chinese state-run tire company Doublestar, a preferred bidder of Kumho Tire, chose to renegotiate the raised trademark fee of the Korean tire company instead of dropping the deal.

The Korea Development Bank, the main creditor of the beleaguered tire company, said Monday that Doublestar has decided not to accept Kumho Asiana Group Chairman Park Sam-koo’s renewed conditions for using the Kumho Tire label, which was raised from 0.2 percent to 0.5 percent last Friday.

“We will request Park to cooperate so that Doublestar can use the trademark on the initial conditions,” a KDB official said. “We will officially request Park to respond with the deadline of Friday.”

Kumho Industrial, the de facto holding company of Kumho Asiana Group and the owner of the Kumho Tire trademark, counter-proposed to Doublestar on Friday the renewed condition of using the Kumho Tire trademark by raising the fee from the initial 0.2 percent of the yearly revenue to 0.5 percent.

Park also requested an extension of the trademark’s mandatory usage period from the initial five years to 20 years, obliging Doublestar to use the trademark and pay the usage fee for the next 20 years no matter how the company performs.

Under the renewed terms, Doublestar will have to pay 150 billion won ($133 million) every year for the next 20 years to Kumho Industrial when substituting the rate to last year’s sales figure, which was 3 trillion won.

“We agreed that selling Kumho Tire is the best way to normalize the company’s operations and benefit the country’s economy,” a KDB official said.

About 100 branch managers of Kumho Tire franchises gathered in front of Kumho Asiana Group headquarters in Gwanghwamun, central Seoul, on Monday to protest their company being handed over to the Chinese tire maker.

“A total of 1,500 branches of Kumho Tire are in a critical situation as Doublestar is likely to acquire the company,” Han Jae-deok, a representative of the Kumho Tire outlets’ managers, said during the rally. “Doublestar is highly likely to steal the technology of tire production and liquidate the remaining assets, such as domestic factories.”

Han added, “We strongly request that KDB and other creditors immediately suspend the deal with Doublestar and look for ways for the company and franchises to co-exist.”

Staff and executives of Kumho Tire’s suppliers, mostly based in Gwangju, also issued a statement on Monday requesting the new Moon Jae-in administration carry out the pledge it made during the election period to protect Kumho Tire from being sold to a foreign company.

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