SEOUL -- Workers at troubled Kumho Tire have approved the company's acquisition by Chinese peer Qingdao Doublestar after a standoff that went down to the wire, saving South Korea's No. 2 tire maker from a likely bankruptcy.
The Kumho labor union voted Friday night in favor of the 646.3 billion won ($607 million) deal, which would give Doublestar a 45% stake in the company. Kumho's creditors had set a deadline of Friday for labor to accept the plan, after which the deal would have been scrapped.
The creditors, led by government-backed Korea Development Bank, hope to reach a basic acquisition agreement with Doublestar as soon as Monday, putting the South Korean tire maker on the road to recovery under the Chinese company. Kumho faces the challenge of paying down heavy debts that years of restructuring have failed to eliminate.
Heading into Friday, the union remained firmly opposed to a takeover by Doublestar amid concerns about possible staff cuts and technology leaks. But Kim Dong-yeon, South Korea's finance minister and a deputy prime minister, warned that Kumho could fall short of funding if the deal collapsed.
"Unless [Kumho] is able to solicit large amounts of investment, liquidity issues will likely make court-supervised restructuring inevitable," Kim told reporters in Seoul. Kumho has debts due Monday, and as of Friday had no way to pay them, he said.
Were the company to enter court supervision, it likely would be liquidated to repay Kumho's creditors, court officials have said. Senior officials at the tire maker worried that this could wreak havoc on employment and the economy in Gwangju, Kumho's home region.
Urging by Kim and other officials appears to have changed labor's mind with only a short time to spare. The union announced its approval for the deal late Friday during last-minute talks with creditors, management and the government.