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Kumho Tire, union OK turnaround plan to avoid court receivership

All Headlines 16:40 April 02, 2018

SEOUL, April 2 (Yonhap) -- Kumho Tire Co. and its labor union on Monday signed a turnaround plan after the union voted a day earlier in favor of creditors' plan to sell the debt-ridden tiremaker to China's Qingdao Doublestar Co. to avoid court receivership.

Under the turnaround plan, the 3,100-strong union accepted creditors' planned sale of the tiremaker to Doublestar on the conditions that the Chinese tiremaker guarantee job security for Kumho workers and carry out facility investments at the company's plants in South Korea.

Kumho Tire, union OK turnaround plan to avoid court receivership - 1

To help revive the ailing company, Kumho workers agreed to return some of their bonuses for 2018 and 2019 and to improve productivity at the company's local plants, while accepting a wage freeze and a reduction in some work benefits by 2019.

Doublestar will acquire the Korean tiremaker by becoming the biggest shareholder in a planned rights issue. It will invest 646.3 billion won in new shares to be issued by Kumho Tire, according to main creditor Korea Development Bank.

After the rights issue scheduled to take place in the coming weeks, Doublestar will become the biggest shareholder with a controlling stake of 45 percent in Kumho Tire. The KDB-led creditors will have the second-highest 23.1 percent stake in the tiremaker, down from the current 42.01 percent, the state lender said.

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