Kumho Tire Co.’s labor union must agree on a voluntary self-rescue plan proposed by the company to turn around its business, urged the chairman of state-run Korea Development Bank, which is also the South Korean cash-strapped tire maker’s main creditor.

“There is no way to revive Kumho Tire without (Kumho Tire’s) unionized workers’ consent to the (company’s) voluntary self-rescue plan,” Lee Dong-geol, chairman of the state-run KDB, told lawmakers during a plenary session at the National Assembly on Tuesday. “We are exploring all possible options” including a court-led procedure in case the labor union refuses to accept the self-rescue proposal.

Lee’s remarks were made in response to a question raised by lawmaker Kim Yong-tae, head of the National Assembly’s National Policy Committee on whether Kumho Tire would be liquidated if unionized workers fail to confirm the company’s voluntary self-rescue plan.

Kumho Tire management has proposed its unionized workers to agree on its self-rescue plan to freeze wages and adopt a salary peak system while the company is seeking to turn around the business, but both parties failed to agree on the plan on Tuesday, a day after the original deadline given for their negotiations. The labor union is known to have demanded the company and the creditor bank must scrap an option to sell the company to a foreign rival.

After the planned sale of the Korea’s second largest tire maker to smaller rival Chinese tire maker Doublestar Tyre collapsed last year, its creditors early this year decided to renew a process to seek a new owner after reviewing various rescue measures including creditors-led workout program and a P-plan, which is a mixture of court and creditors relief program. Following the decision, the creditors have decided to roll over Kumho Tire’s debts by the end of this year and cut interest rates under the condition the unionized workers consent to the management’s self-rescue and restructuring plan by Feb. 26.

But as the company failed to have its unionized workers back the company’s voluntary restructuring program by the given deadline, speculation is looming that Kumho Tire creditors may choose an option to put the company under court protection. The KDB is expected to hold a meeting with other creditors today to discuss other measures to rescue the troubled tire maker.

At parliamentary questions earlier Tuesday, Lee also reiterated that the KDB will conduct thorough inspection on Daewoo Engineering & Construction Co.’s (Daewoo E&C) overseas business sites after the sale of the builder fell through early this month upon the discovery of massive losses in the builder’s power plant construction project in Morocco. KDB, the main creditor and stakeholder of Daewoo E&C, has been criticized for its failure to inspect the builder’s business after Hoban Construction, the sole bidder for Daewoo E&C, withdrew from the bid at the last minute due to the losses.

Lee vowed to come up with a management plan for Daewoo E&C and undergo one to two years of makeover period while searching for new potential buyers.

By Lee Seung-yoon and Lee Eun-joo

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]