By Lee Hyo-sik
Presidential hopeful Moon Jae-in and other politicians are pressuring the Korea Development Bank (KDB) and other creditors not to sell Kumho Tire to a Chinese company.
They are capitalizing on growing public concerns about possible job losses if Double Star Tires takes control of Korea's second-largest tiremaker, which employs more than 3,800 workers here.
With Kumho Tire operating two of its three plants in the southwestern city of Gwangju and surrounding South Jeolla Province, the politicians want creditors to give a chance to Kumho Asiana Group Chairman Park Sam-koo rather than sell a 40.2 percent stake in Kumho Tire to the mid-tier Chinese tiremaker.
Gwangju and the Jeolla provinces are strongholds of the Democratic Party of Korea (DPK) and other opposition parties.
They are also taking advantage of the increasing anti-China sentiment here because Beijing has been retaliating against Lotte and other Korean companies operating on the mainland over Korea's decision to deploy a U.S. missile defense system.
The political meddling will likely intensify in the coming weeks as presidential contenders try to woo Jeolla voters, ahead of the May 9 presidential election.
On Saturday, DPK presidential contender Moon posted a Facebook message urging KDB to place top priority on job security for 3,800 Kumho Tire workers.
"It is not pleasing for Jeolla residents to witness what's been going on with Kumho Tire," Moon wrote. "The company employs 3,800 workers at three domestic plants. We cannot afford to let the tire maker suffer the same fate as Ssangyong Motor. The top priority is to ensure job security for all Kumho employees. Whoever acquires the company, it must not close local plants or dismiss workers."
After Shanghai Automotive Industry took over Ssangyong Motor in 2004, it fired hundreds of workers to cut costs. The Chinese carmaker was also criticized for allegedly stealing Ssangyong's core technologies while not investing enough to strengthen the Korean carmaker's competitiveness.
Ssangyong was sold again to Indian carmaker Mahindra & Mahindra in 2011.
Gwangju Mayor Yoon Jang-hyun also expressed concern about the ongoing Kumho Tire sale, calling on KDB and other creditors to conduct business in a fairer, more subjective manner.
"Concerns are growing over the Chinese firm's takeover of Kumho Tire among local residents and businesses that could be affected by the issue," Yoon said Saturday. "The creditors should come up with a range of follow-up measures to address increasing uneasiness."
Last Friday, People's Party Rep. Chang Byung-wan and other party lawmakers urged KDB and other creditors not to discriminate against Kumho Asiana Group.
"It is absurd for KDB not to allow Kumho Chairman Park to form a consortium with other corporate entities, while Double Star can do so," said Chang, who heads the National Assembly's trade, industry and energy subcommittee. "KDB should make public a sales contract it signed with Double Star and conduct sales procedures in a fair and transparent manner."
On March 13, KDB signed an agreement with Double Star, which offered to buy the Kumho Tire stake for 955 billion won ($840 million).
Park will have to inform creditors by April 13 whether he will pay a higher price or give up his right to buy the company back.
Park has been asking KDB to let him set up a consortium so he can more easily raise the 955 billion won.
But creditors have refused to do so, saying he is only permitted to set up a private company and borrow money from financial investors if he wants to buy the Kumho Tire stake.
The chairman has threatened to sue KDB to suspend the sales process, while demanding the bank release details of the deal with Double Star and other sales-related documents.
KDB and other banks acquired their stake in a debt-for-equity swap in 2010 when Kumho Asiana suffered a severe liquidity shortage.
They then signed an agreement to negotiate first with Park when unloading their stake.
As well as four plants in China, Kumho Tire operates three plants in Korea and one each in Vietnam and the U.S.
In 2016, the company had 2.95 trillion won in sales and posted a 120 billion won operating profit.