Kumho Tire’s union voted to sell the company to the Chinese firm Doublestar. According to Kumho Tire, 60% of the 2,741 voters were in favor of the sale to Doublestar. Over 90 percent of the company’s 2,987 union workers participated.
Eight of the company’s creditors, led by the state-owned Korea Development Bank (KDB), are expected to sign an agreement to sell 45% of their stake in Kumho Tire for 646 billion won ($609 million) to Doublestar.
The union workers reversed their opposition to the Doublestar sale after President Moon Jae-in’s administration repeatedly confirmed that it would not use public funds to save the company. KDB President Lee Dong-gull repeatedly stressed that if the company isn’t sold, Kumho Tire’s heavy debts could lead the company to liquidation even if it goes through with the court restructuring program.
If the agreement with the creditors is signed, Doublestar will guarantee the job security of 5,000 employees, including 2,000 office workers, for the next three years. The Chinese company will also be required to remain the largest stakeholder in Kumho Tire for a minimum of five years.
To help revive the financially troubled tire maker, Kumho’s union workers have agreed to return some of their bonuses in 2018 and 2019 and accept a wage freeze and a reduction in some work benefits by 2019.