Inching closer to a deadline set by the creditors of Kumho Tire for the protesting labor union to decide on selling the ailing company to Chinese tiremaker Doublestar, related parties are making all out efforts to hype up public opinion for the sale, against the opposing voices of the labor union.

Office workers of Kumho Tire on Monday held a protest in front of the Kumho Asiana headquarters in northern Seoul, opposing a walkout and calling for prompt management normalization.

Doublestar Chairman Chai Yongsen arranged a rare news interview with leading South Korean press to emphasize that the investment is more than a short-term gain strategy.

Lee Dong-gull, head of the state-run Korea Development Bank, meanwhile, visited Kumho Tire’s Gwangju factory to persuade factory workers to get on board with the plan.

Out of 1,500 employees, 97.3 percent had agreed to the injection of foreign capital to save the tiremaker and avoid an intensified company overhaul and slash its value, the company said in a statement.
 

“For now the company needs foreign capital and help from creditors to recover business. The labor union must immediately come back to the table for an agreement,” said Lee Yoon-chang, the head of Kumho Tire’s office workers.

Kumho Tire creditors, headed by KDB, had agreed to sell the tiremaker to Doublestar in a recapitalization worth 646.3 billion won ($594.6 million) last week, sparking greater conflict with the union.

The figure is about 300 billion won less than the initial price Kumho Tire’s 42.01 percent shares marked at 955 billion won in January last year.

If the deal goes through, Doublestar will become Kumho Tire’s largest shareholder with 45 percent stake, while the creditors’ current stake will fall to 23.1 percent.

If the company and the creditors fail to receive approval from the union until the end of this month, Kumho Tire will go into a workout process.

The going concern value of Kumho Tire was 460 billion won, while its liquidating value was 1 trillion won, according to due diligence conducted by Samil PricewaterhouseCoopers.

The labor union is vehemently opposed to Doublestar taking over out of concerns of technology leaks and seeking short-term gains with consequent job insecurity, citing a past case of Chinese carmaker SAIC Motor’s acquisition of SsangYong Motors in 2004.

Touching on such concerns, Doublestar Chairman Chai in his first interview with Korean media held at its Qingdao headquarters last week said that the purchase is aimed for long-term strategy.

He emphasized Doublestar’s technological achievements by opening its Qingdao factory and research and development center to soothe speculations that it would sell Kumho Tire once Doublestar gets its hands on the tiremaker’s technology and know-how.

Kumho Tire’s unionized labor will stage a three-day partial strike through Friday, followed by a general strike on March 24. 

By Kim Bo-gyung (lisakim425@heraldcorp.com)