Kumho Tire creditors give ultimatum over fee spat

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Kumho Tire creditors give ultimatum over fee spat

While the fate of beleaguered Kumho Tire still hangs in balance, main creditors of the tire maker, including the Korea Development Bank, said there will be no additional support if the sale of the company falls through.

“Creditors provided a substantial amount of support until now [worth 3.9 trillion won, or $3.4 billion] but the company continued to perform poorly,” said an official from KDB. “The deal with Doublestar is the final chance to turn things around but if this is blown off, then creditors have no choice but to take extreme measures.”

Korea Development Bank said Tuesday after the emergency creditors’ meeting that the sale of Kumho Tire to Doublestar is essential to normalize the company.

Extreme measures include ousting executives of Kumho Tire, including Park Sam-koo, chairman of Kumho Asiana. Creditors have delegated management of the troubled tire company to Park since the beginning of the workout program in 2010.

Kumho Tire posted a net loss of 60.6 billion won in the first quarter. About 40 percent of Kumho’s entire business comes from China, where it struggles, according to the KDB.

If the deal is jeopardized due to issues such as disagreements on the trademark fee, creditors said they will provide no more support. Kumho Tire would have no choice but to file for court receivership.

The creditors’ meeting on Tuesday took place after Kumho Industrial, the de facto holding company of Kumho Asiana Group that owns the trademark rights to Kumho Tire, on Monday re-affirmed its stance on the trademark fee. On June 9, Kumho Industrial raised the fee to 0.5 percent of annual revenue.

Doublestar rejected the terms and KBD proposed on June 13 that Kumho Industrial accept the original terms.

Creditors also reportedly decided to call on main bidder Doublestar to accept Kumho Industrial’s latest terms on the trademark fee. A KDB official, however, said creditors have not agreed to implement the measures.

BY CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]
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