FSC calls on Kumho union to accept deal

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FSC calls on Kumho union to accept deal

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Choi Jong-ku

The chief of Korea’s financial regulator called on the labor union of Kumho Tire to accept its creditors’ proposal to sell the loss-making tiremaker to China’s Doublestar.

Choi Jong-ku, head of the Financial Services Commission, said that it is regrettable to see the union group blocking the proposal.

“I am sorry to hear that the labor union moved away from the turnaround proposal made by the creditors,” Choi said.

“Creditors’ requests contain the adjustment of salary and corporate welfare benefits, which are necessary to turn the company around,” the head said.

Kumho’s union launched a one-day walkout on Wednesday to protest the foreign acquisition of the company and other demands by the Korea Development Bank (KDB), the main creditor of the troubled tiremaker.

Kim Jong-ho, chief executive officer of Kumho Tire, met two union leaders who staged a demonstration atop a utility pole near the tire manufacturer’s plant in Gwangju.

The leaders ended their sit-in after Kim’s visit, 12 days after the protest began.

Still, the union is at odds with the creditor. Kumho management sides with the bank.

The main creditor asked Kumho Tire to reach an agreement on the proposal by March 30, an ultimatum that could lead to court receivership if not met.

As for GM Korea’s fate, chairman Choi reiterated the U.S. automobile company’s willingness to stay in Korea.

The comment appears to be in response to speculation that GM Korea might leave Korea ahead of due diligence.

“The government and KDB were reassured that GM is determined to keep operating in Korea,” Choi said.

The due diligence kicked off on Wednesday and will likely last for two to three months.

The KDB said the same day that it would provide short-term loans to GM’s Korean unit from April if the company cooperates with due diligence.

The chairman also urged local banks to be responsible and transparent when adjusting their interest rates.

Major local banks have raised the interest rates of mortgage loans as the Bank of Korea and other central banks in major economies are expected to accelerate the pace of interest rate hikes.

“This is not intended to push the banks to lower rates,” he said, “our focus is to see whether they raised the rate in accordance with market trends and practices.”


BY PARK EUN-JEE [park.eunjee@joongang.co.kr]
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