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The Korea Herald
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THE INVESTOR
March 29, 2024

Automobiles

Doublestar chairman visits Korea to persuade labor union

  • PUBLISHED :March 21, 2018 - 19:57
  • UPDATED :March 21, 2018 - 19:57
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[THE INVESTOR] As Kumho Tire continues facing opposition from unionized workers regarding the sale of the company to a Chinese state-run tiremaker, Doublestar Chairman Chai Yongsen is visiting Korea to persuade the labor union, the Korea Development Bank confirmed on March 21.

Chai is scheduled to hold a press conference on March 22 morning at the KDB headquarters and to discuss unresolved issues with creditors during the trip. The chairman is also expected to explain Doublestar’s future investment plans to the labor union, seeking to ease concerns that it may lay off workers or put Kumho Tire up for sale after gaining Kumho’s technical know-how.

 

China's Doublestar chairman Chai Yongsen (second right)



Chai’s visit comes as a recapitalization deal signed last week could fall apart without consensus from the union by March 30. If the labor union does not agree before the deadline, Kumho Tire would go into a workout process.

Kumho Tire creditors had agreed to sell the tiremaker to Doublestar in a recapitalization effort worth 646.3 billion won (US$594.6 million).

This would make the Chinese firm Kumho’s largest shareholder, with 45 percent of shares, and creditors the second-biggest with 23.1 percent.

The deal has driven the union to hold a three-day partial strike until March 23 and a general strike on March 24.

As part of efforts to convince the union, KDB Chairman Lee Dong-gull went to Kumho’s Gwangju plant earlier this week, but failed to make progress.

“Doublestar is keen on buying Kumho Tire as it is eyeing the tiremaker’s US plant to expand its business, while creditors are trying to sell the company while it can before Kumho’s value drops further,” said Lee Ho-guen, a professor of the department of automotive engineering at Daeduk University.

“Chai will meet with creditors to narrow differences regarding details of the acquisition. He will most likely agree to three-year job security,” he predicted.

Chai’s remarks during an interview with Korean media last week that he was not aware of a term that guarantees three years of job security for Kumho Tire workers had stirred more controversy, as employment succession is prioritized by the labor union.

The KDB explained that the two parties had agreed on employment succession, as is guaranteed under the Korean commercial law in recapitalization deals.

The going concern value of Kumho Tire was 460 billion won, while its liquidating value was 1 trillion won, according to due diligence conducted by Samil PricewaterhouseCoopers.

By Kim Bo-gyung/The Korea Herald (lisakim425@heraldcorp.com)

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