April 20, 2024

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[THE INVESTOR] Qingdao Doublestar on March 21 vowed that there would be no layoffs after its planned acquisition of Kumho Tire amid growing political pressure to block the sale of the nation’s No. 2 tire maker to a Chinese firm.

“Doublestar has agreed with the creditors to accept and hold all present job positions of Kumho Tire employees,” the Chinese tire maker said in a statement. “We also plan to recruit more talent from the region to promote valuation and sustainable growth of Kumho Tire.” 

Doublestar also reaffirmed its previous stance to keep the Kumho Tire operations separate from the Chinese brand.

The remarks comes at a time when anti-China sentiment is growing here, following Beijing’s economic retaliatory measures against Seoul’s move to deploy the US-led THAAD system in the region.

On the previous day, major presidential candidates fueled public concerns, calling on creditors to reconsider the Kumho Tire bid, asserting the Chinese firm would end up firing local employees, as well as leak the technology overseas.

Doublestar, however, expressed confidence that the takeover will create synergy for the both firms, creating a top 10 global tire maker when combined.

“Doublestar’s acquisition of Kumho Tire is expected to generate a ‘win-win’ effect for not only the two companies’ employees, but also their shareholders, clients, and the global tire industry,” the company said. “Also, the development of Kumho Tire will benefit all employees, shareholders and the society in general.”

Kumho Tire was put under the control of creditors -- including Woori Bank and the Korea Development Bank -- 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, 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$855.60 million).

The chief has to decide by April 12 whether he will practice his rights by offering more than Doublestar, or drop out.

Park has threatened to take legal action against the KDB, one of leading creditor banks, if it does not allow him to purchase the tire-making unit back by forming a consortium with strategic investors to finance the buyout.

The KDB said it will decide whether to allow Park to form a consortium by March 22, after receiving opinions from other creditor banks.

By Ahn Sung-mi (sahn@heraldcorp.com)