Kumho Tire Co. is one step closer to reconciling its debt.
Unionized workers for the South Korean tiremaker voted to accept creditors’ plan to sell to China’s Qingdao Doublestar Co. to avoid being placed under court receivership, the Korea Herald reported. The 3,100-member union backed the proposed sale plan in which 2,741 union workers participated and 60.5% of them gave the go-ahead to the sale plan, The union said in a statement to the Korea Herald.
Under the deal, Doublestar vowed to make investments in Kumho Tire and guarantee job security for the existing 5,000 employees, including about 2,000 office workers, for three years after the acquisition, The Korea Herald reported. In turn, the union has agreed to return some of their bonuses for 2018 and 2019 and to improve productivity at its plants, while accepting a wage freeze and a reduction in some work benefits by 2019.
The union’s passage gives Doublestar a go-ahead on investing $600 million (USD) for a 45 percent stake in Kumho. The deal between the two companies has taken many twists and turns in the past year with both companies coming close to an acquisition deal last year. Yet, it fell through at the last minute with creditors not meeting Doubelstar’s demands.
However, negotiations with Kumho and Doublestar are far from finished. The two still need to iron out detailed negotiations and a business stabilization plan, which includes measures for how Kumho Tire should be independently managed, Business Korea reported.
