Kumho Tire fails to reach consensus on turnaroundKumho Tire and its labor union failed to finalize the details of a turnaround plan for the cash-strapped tire company on Monday, pushing it closer to court receivership.
The union refused to back down on requests that Korea Development Bank, the main creditor, completely eliminate the possibility of attracting foreign investment during Monday’s negotiation session. KDB maintained its stance that it would pursue every possible opportunity, including foreign investment.
“We don’t want to put restrictions or limits on possible candidates for investment in Kumho Tire, even if it is a foreign investor,” said a KDB spokesman Monday.
“If the union persists in its demand to wipe out the possibility of foreign investment, it will be hard to come to terms with them,” he added.
Monday was KDB’s deadline for the union and management to approve the turnaround plan. The proposal included Kumho Tire’s plan to turnaround its business including generating 140 billion won in yearly sales and cutting employees’ annual salaries but ensuring long-term employment.
If the two sides had come to terms by Monday, KDB was planning on extending the due date of its more than 1.3 trillion won debt and giving a discount on interest payments.
Negotiations began on Monday morning and continued into the evening, delaying a board meeting scheduled to be held afterwards.
“If the maturity date for the company’s debt doesn’t get extended and we have to come up with the money right away, restructuring is inevitable,” said a Kumho Tire spokesperson on Monday. “If the union doesn’t approve the turnaround plan, filing for court receivership is the most likely scenario,” the spokesperson added.
Doublestar, which was the preferred bidder for Kumho Tire but pulled out of the deal last September, has reportedly resumed negotiations with KDB early this year.
Last Friday, Kumho Tire’s labor union issued a statement opposing a buyout by Doublestar.
“We cannot help but get infuriated at the company management and the creditors’ decision to push for Kumho Tire’s sale to Doublestar despite the union and local residents’ opposition,” the statement said.
“If the deal continues with Doublestar, the union and local residents are going to attempt to block it in every possible way, including a complete walkout,” it added.
Amid the ongoing negotiations, Kumho Tire’s labor union will go on a partial strike on Tuesday and Wednesday.
BY JIN EUN-SOO [firstname.lastname@example.org]