[Courtesy of Kumho Tire]
SEOUL -- The union of South Korea's troubled second-largest tire company, Kumho Tire, played Truth or Dare with creditors Monday ahead of a deadline for accepting an investment by China's Doublestar in return for its ownership.
Korea Development Bank (KDB), a state policy lender, has warned of court receivership unless Kumho Tire presents a self-rehabilitation package including the union's consent on the proposed sale of a 45-percent stake to Doublestar by the end of this month.
On Monday, KDB head Lee Donng-gull insisted that at talks last week with Doublestar Chairman Chai Yongsen, union leaders made a verbal promise to accept Doublestar's ownership in return for job security.
However, union leaders dismissed Lee's argument, saying they still want a domestic company to take over. They rejected a proposed vote by all Kumho Tire workers on Doublestar's proposal.
Last week Chai offered to nurture Kumho Tire as an internationally viable tire maker controlled by professional managers if its union accepts his ownership. He said Kumho Tire would focus on mid and high-end tires for passenger vehicles while Doublestar specializes in mid and low-end tires for trucks and buses.
In March last year, Doublestar signed a share purchase agreement to secure a 42.01 percent stake in Kumho Tire, but the deal broke down because of disputes over job security, the use of Kumho's brand, a proposed cut in prices, and the union's objection among other things.
Kumho Tire was put under a debt workout program in December 2009 due to a severe liquidity crunch. It graduated from the program in late 2014, but the company's crisis has been aggravated by poor sales in China and mismanagement by its former owner, Kumho Asiana Group.
reporter
Lim Chang-won
cwlim34@ajunews.com
