Unionized workers at Kumho Tire Co. went on strike Wednesday to protest plans by creditors to sell the debt-ridden company to a Chinese firm, the union said.
"We will go on strike for the whole day (of Wednesday) as we oppose creditors' plan to sell the company to Qingdao Doublestar Co.," a union spokesman said by phone.
Two union leaders have staged a demonstration atop a utility pole near the tiremaker's plant in Gwangju, 330 kilometers south of Seoul, since early this month to oppose the M&A plan.
The walkout comes after the main creditor state-run Korea Development Bank said the only option to turn the loss-making tiremaker around is to sell it to Qingdao Doublestar as the Chinese firm has outlined a comprehensive investment plan to help make the company make a comeback.
In its proposal, Doublestar said it will invest 646.3 billion won ($599 million) in Kumho Tire's new shares, which would allow the Chinese tiremaker to become the biggest shareholder with a stake of 45 percent and the KDB-led creditors to collectively own a 23.1 percent stake.
On top of the investment in Kumho Tire's new shares, Doublestar said it will invest 200 billion won in the tiremaker's production facilities while guaranteeing job security for existing union workers for three years.
Creditors asked the 3,000-strong union to decide on whether to accept Doublestar's investment proposals by the end of this month. If the union refuses, the tiremaker will have to be placed under a court receivership.
In 2017, Kumho Tire's net losses deepened to 89 billion won from 38 billion won a year earlier. It shifted to an operating loss of 156.9 billion won from an operating profit of 120.05 billion won a year ago. Sales fell 2.4 percent to 2.87 trillion won from 2.947 trillion won during the same period.
Kumho Tire has eight plants -- three in South Korea, three in China, one in Vietnam and one in the United States -- which have a combined capacity of 54.64 million tires.
The company's current value is estimated at 460 billion won, which falls far short of the firm's liquidation value of 1 trillion won, according to an accounting firm that conducted due diligence on the company. (Yonhap)