Kumho Asiana Group stuck to its guns on trademark terms despite pressure from creditors, jeopardizing the deal to sell Kumho Tire Co. to Chinese rival Doublestar Tyre Co. as well as the country’s second largest tire maker’s solvency.

Kumho Industrial Co. that owns Kumho trademark rights sent a letter to Kumho Tire’s main creditor Korea Development Bank (KDB) on Monday reiterating it could allow Doublestar to use Kumho trademark only if the Qingdao-based firm agrees to pay 0.5 percent of the tire maker’s annual sales in royalty fees for the next 20 years.

Doublestar maintains that it cannot accept terms beyond the 955 billion won ($840 million) buyout deal signed with the state bank in March under which the company is asked to pay 0.2 percent of annual sales for use in the Kumho trademark and has the choice to give up the brand after five years.

In order to save the deal, creditors of Kumho Tire have warned that if Kumho Asiana Group does not yield its demand they would not roll over the tire maker’s 1.3 trillion won worth bonds that mature this month.

The country’s second largest tire maker would be headed for the bankruptcy court, and the deal with Doublestart will likely fall through.

KDB set the royalty fee at 0.2 percent of annual sales given that Kumho Asiana levies on an average of 0.2 percent of sales in royalties to its units. However, the group insists on getting at least 0.5 percent in order to protect the value of Kumho brand, according to an official from Kumho Industrial. Under the new terms demanded by the group, Doublestar’s royalty fee payment surges to 14.7 billion won per year based on last year’s sales of 3 trillion won, more than doubled from 5.9 billion won based on the agreed-upon terms of 0.2 percent.

Doublestar is unlikely to back down as it insists its bid of 955 billion won covers the right to use the brand. On top of that, the value of the 42.01 percent stake in Kumho Tire the Chinese firm is seeking to take over fell to around 500 billion won due to poor sales. A source from the investment banking industry said the Chinese tire maker is not likely to pay more as it has already offered high price.

By Kim Jung-hwan and Noh Seung-hwan

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]