The ongoing Kumho Tire
bid process has swiftly turned political as liberal presidential candidates have pressured the creditors not to sell the nation’s No.2 tire maker to a Chinese firm.
Moon Jae-in, the front-runner for the upcoming presidential election and other liberal contenders have expressed concern that the sale of Kumho Tire to Qingdao Doublestar could lead to major job losses in the area, in an attempt to woo voters in the traditionally liberal Honam district -- the country’s longtime southwestern regions that include Gwangju, South Jeolla and North Jeolla Provinces.
Kumho Tire, headquartered in Gwangju, operates two of its three assembly plants in this region.
“People from Honam region are perplexed by Kumho Tire’s situation,” said Moon of the liberal Democratic Party of Korea on Twitter on March 19. “Kumho Tire has plants in Gwangju, Gokseong and Pyeongtaek. There are 3,800 employees working (at Gwangju and Gokseong plant alone). We have to save their lives, as well as the Honam economy that is going through a tough time. The creditors should make a careful decision considering the sale’s impact on national interests, regional economy and job security.”
Other candidates, including South Chungcheong Gov. An Hee-jung and Seongnam Mayor Lee Jae-myung, both from the Democratic Party, and Ahn Cheol-soo of the People’s Party, called on the creditors to reconsider the Kumho Tire sell-off to Doublestar, on concerns that the Chinese firm will end up firing local employees, as well as leak the technology to overseas.
On politicians’ outcry, coupled with growing public anti-Chinese sentiments, the creditors are considering whether to allow Kumho Asiana Chairman Park Sam-koo to form a consortium to practice his rights of first refusal in the bid.
Park has threatened to take legal action against the Korea Development Bank, one of leading creditor banks, if it does not allow him to purchase the tire-making unit back by forming a consortium.
The KDB on March 20 asked other creditor banks to make a decision by March 22. If 75 percent of creditors agree, Park will be allowed to form a consortium to finance its buyback.
Kumho Tire was put under the control of creditors –- including Woori Bank and the KDB -– in 2009 due to a liquidity crisis caused by the group’s excessive business expansion.
During that time, Park was granted the rights of first refusal in the sell-off that allows him to buy back the stake by paying more than the highest bidder.
Earlier on March 13, Chinese tire maker Doublestar entered into a stock trade agreement with the creditors to take over a controlling 42.01 percent stake in Kumho Tire for 955 billion won (US$833.63 million).
The chief has 30 days to decide whether he will practice his rights by offering more than Doublestar, or drop from the bid.
Park expressed his strong intention to give up his rights, if he is not permitted to form a consortium with strategic investors to finance the buyout.
By Ahn Sung-mi (firstname.lastname@example.org