Kumho Asiana Chairman Park Sam-koo is under high pressure to negotiate terms for the use of the Kumho Tire name in an ongoing purchase deal with Chinese tiremaker Doublestar, as Kumho Tire creditors on Friday discussed extending the deadline on the company’s debt by three months.

Kumho Tire is expected to pay back approximately 1.3 trillion won ($1.16 billion) of debt at the end of next month, but it is currently facing a liquidity crisis. Without an extension on the deadline, the company is likely to go under court receivership. The three-month extension is a temporary measure until the completion of the Doublestar deal, which is predicated on a five-year extension on the debt. 

The three-month extension will be put to an official vote by the creditors in early June.

The 955 billion won deal would give Doublestar a controlling stake in Kumho Tire, the last piece of the Kumho Asiana empire that Chairman Park Sam-koo has been publicly seeking to bring back into the group after losing it in a debt restructuring deal in 2010. Under the current agreement between Doublestar and Kumho Tire creditors, Doublestar will be able to use the Kumho Tire brand for 20 years. However, Kumho Asiana has stood firm in its stance that it will not agree to these conditions.

A spokesman for Kumho Asiana said that the group would consider allowing Doublestar to use the Kumho name for five years “provided that a reasonable agreement is reached” regarding the conditions for the usage, but that there have been no negotiations thus far.

If those brand usage rights are not guaranteed, the deal with Doublestar will become void, reviving Chairman Park’s right of first refusal for Kumho Tire. However, Park does not currently have the funds to purchase the controlling stake in Kumho Tire and to pay back the tire company’s debts, meaning the survival of Kumho Tire itself may be on the line.

In the first quarter of this year, Kumho Tire saw 669.3 billion won in sales with operating losses of 28.2 billion won.

If Kumho Tire goes under court receivership, the situation becomes problematic for Park as well. The collateral held by the Kumho Tire creditors includes a stake in Kumho Holdings, the holding company for Kumho Asiana Group. If that 40 percent stake is controlled by the creditors, Park will lose his grip over the entire group. 

By Won Ho-jung (hjwon@heraldcorp.com)