Creditors of Kumho Tire Co. have warned that South Korea’s largest tire maker is headed for the bankruptcy court if its former owner Park Sam-koo, Kumho Asiana Group chairman, does not hand over Kumho’s trademarks to its preferred bidder Doublestar Tyre Co. of China within the next three months.

The ultimatum in exchange for a three-month rollover on 1.3 trillion won ($1.2 billion) worth bonds that mature next month by main creditors comes amid Park’s blocking of the buyout to the Chinese rival by holding Kumho trademarks as hostage.

Kumho Tire must receive new capital to pay back 1.3 trillion bonds as its Chinese unit responsible for 40 percent of its total revenue has run out operating funds.

Kumho Tire’s main creditor Korea Development Bank (KDB) convened a creditors’ meeting on Friday to approve the scheme to keep the deal with Doublestar alive.

Qingdao-based Doublestar signed a contract to buy a 42.01 percent stake in Kumho Tire with its creditors in March. Its attempt to buy out the bigger Korean rival hit a snag last month when Kumho Asiana Group said it would not relinquish Kumho trademark right owned by the group’s unit Kumho Industrial Co. Doublestar insists its bid of 955 billion won covers the right to use the brand for 20 years after the acquisition.

Park had the right of refusal, or the priority to buy back the tire marker his father had founded, if he could match the price by the preferred bidder. He gave up the right claiming creditors were being unfair by denying him the right to form a consortium to raise the funds. He has been suspected of buying time until the end of September, the deadline for the completion of the buyout.

Creditors would push back the debt payment until the end of September and declare insolvency should the deal go under because Park held back the trademark right. The plan demands approval from the other 75 percent of the creditors. KDB owns 32.2 percent voting right and Woori Bank holds 33.7 percent.

Kumho Tire has plunged into liquidity crisis as it lost clients from delayed sales. Sales of its Chinese operation have dropped sharply as the result of Beijing’s retaliatory actions over Korea’s deployment of U.S. antimissile system. The Chinese branch has run out of cash reserves and the Korean operation also has a mere 50 billion won in liquidity, according to sources. It needs to repay 500 billion won worth debt to some Chinese banks this year, and the banks have already notified the company that they would not extend the maturity of the debts.

Park has been eager to regain Kumho Tire he had surrendered in group-wide liquidity crisis in 2010.

By Chung Seok-woo, Kim Jung-hwan and Noh Seung-hwan

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