In response to the state-run Korea Development Bank’s decision to sell the struggling Kumho Tire to Chinese tiremaker Double Star, the labor union of Kumho Tire will stage a partial strike this week followed by a general strike next week, the union said Monday.
Kumho Tire’s Gwangju and Gokseong plants in South Jeolla Province had stopped production Saturday due to partial strikes staged by the union, the company said.
Last week’s partial strikes came after the Korea Development Bank, the main creditor of Kumho Tire, announced Friday that it would sell the tiremaker to China’s Double Star through recapitalization worth 646.3 billion won ($594.6 million).
Kumho Tire is the country’s second-biggest tiremaker and No. 14 in the world by sales.
Heads of Kumho Tire’s labor union started a sit-in protest at a transmitting tower near the Kwangju factory in South Jeolla Province last week. (Yonhap)
“To put management at Kumho Tire and the Chinese unit back on track as quickly as possible, and to minimize losses, negotiating with Double Star was seen as the most rational option,” the KDB said.
The KDB backed its decision with a due diligence report by Samil PricewaterhouseCoopers that put the going concern value of Kumho Tire at 460 billion won, with a higher liquidation value of 1 trillion won.
Two heads of Kumho Tire’s labor union also started a sit-in protest at a 20-meter-high transmitting tower near the Kwangju factory following KDB’s announcement.
If the recapitalization deal goes through, Double Star would become Kumho’s largest shareholder with a 45 percent share, lowering Kumho creditors’ share to 23.1 percent.
The creditors and Double Star are aiming to complete negotiations by the first half of this year.
Both sides have agreed on the three-year employment succession of Kumho Tire workers, and the prohibition of Double Star from selling the local tiremaker for three years and the creditors for five years.
By Kim Bo-gyung (firstname.lastname@example.org