Kumho Tire union backs off, opts for vote on Doublestar
[THE INVESTOR] Ailing Kumho Tire’s labor union said on March 30 it has decided to hold a vote on whether to accept the acquisition bid by China’s Qingdao Doublestar as early as tomorrow.
The union had been holding out against allowing the Chinese tire maker to acquire a controlling stake in the Korean tire manufacturer. It has also been clashing head-on with state-run Korea Development Bank, which has been calling for Kumho to accept the terms. “We discovered that there are no more domestic investors who are willing to invest or acquire us out of fear of the government,” one unionist told the press.
Kumho unions stage a sit-out.
Court receivership still in the cards for Kumho Tire
Union remains resistant to Doublestar’s acquisition of Kumho Tire
A few days ago, Korean tire maker Tire Bank had said it could bid, but skeptics ruled it out on account of the size of its assets.
Since then, KDB has been urging Kumho to accept the deal with Qingdao, which has promised a US$600 million investment for a 45 percent stake. Doublestar Chairman Chai Yongsen was in Seoul last week, assuring Kumho that its independence would be guaranteed. The union will be sitting down with creditors this afternoon to discuss the details.
Some industry watchers say the fact that the union has decided to hold a vote and talk about Qingdao shows the workers are likely to accept the proposal. As an added incentive, the government has offered a 200 billion won (US$188 million) of fresh funding should the Qingdao investment go through.
But if the talks fail to produce anything, KDB is saying it will go ahead and apply for court receivership.
“We ask for the Kumho Tire employees to help us help you,” Korea’s Finance Minister Kim Dong-yeon said in an emergency address on March 30. “Accepting the investment is the only way for normalization.”
Kumho currently has up to 3 trillion won of debt outstanding.
By Ahn Sung-mi (firstname.lastname@example.org)