[Yonhap News Photo]
SEOUL -- Under mounting pressure from creditors and government officials, the union of South Korea's second-largest tiremaker, Kumho Tire, eased its tough stance Friday and agreed to hold a vote on an investment from a Chinese company.
The change was decided at talks by union leaders who had opposed a vote by Kumho Tire workers on the proposed sale of a 45-percent stake to China's Doublestar. No date was given. Union leaders are to meet with government officials and creditors later.
Korea Development Bank (KDB) regards China's Doublestar as the sole candidate to normalize the operation of the debt-stricken tire company. The state policy bank has warned of court receivership unless Kumho Tire presents a self-rehabilitation package by the end of this month.
Earlier in the day, Finance Minister Kim Dong-yeon said in a government statement signed by other ministers that Kumho Tire would not be able to repay its maturing debt unless it receives outside financial support.
"The only option is to improve the financial structure and establish a basis for normalization through large-scale new investments," Kim said.
Kumho Tire is saddled with about a total debt of 2.4 trillion won (2.25 billion US dollars)and some 27 billion won matures on Monday. Kim said that if the union accepts an investment from Doublestar, creditors will inject a fresh fund of 200 billion won, roll over its maturing debt and lower interest rates.
Kumho Tire President Han Yong-sung said the company is ready to file for court receivership that could lead to the loss of jobs by up to 40 percent.
"If Chinese capital is attracted, some wage losses and readjustments will be inevitable. This is a far healthier and more desirable direction than harsh restructuring and job loss to be caused by court receivership," he said.
