Kumho Tire workers go on strike amid M&A plan
[THE INVESTOR] Unionized workers at Kumho Tire went on strike on March 14 to protest plans by creditors to sell the debt-ridden company to a Chinese firm, the union said.
“We will go on strike for the whole day as we oppose creditors’ plan to sell the company to Qingdao Doublestar,” a union spokesman said by phone.
Two union leaders have staged a demonstration atop a utility pole near the tire maker’s plant in Gwangju, 330 kilometers south of Seoul, since early this month to oppose the M&A plan.
The walkout comes after the main creditor state-run Korea Development Bank said the only option to turn the loss-making tire maker around is to sell it to Doublestar as the Chinese firm has outlined a comprehensive investment plan to help make the company make a comeback.
In its proposal, Doublestar said it will invest 646.3 billion won (US$599 million) in Kumho Tire’s new shares, which would allow the Chinese tire maker to become the biggest shareholder with a stake of 45 percent and the KDB-led creditors to collectively own a 23.1 percent stake.
On top of the investment in Kumho Tire’s new shares, Doublestar said it will invest 200 billion won in the tire maker’s production facilities while guaranteeing job security for existing union workers for three years.
Creditors asked the 3,000-strong union to decide on whether to accept Doublestar’s investment proposals by the end of this month.
If the union refuses, the tire maker will have to be placed under court receivership.
By Song Seung-hyun and newswires (firstname.lastname@example.org)