Creditors of Kumho Tire Co. unanimously approved the plan to sell the South Korea’s cash-strapped tire maker to China’s Doublestar Tyre through rights offering worth 646.3 billion won ($597.4 million), state-run Korea Development Bank (KDB), Kumho Tire’s main creditor said Sunday.

The Qingdao-based tire maker proposed to invest 646.3 billion won, 5,000 won apiece, in new shares of Kumho Tire to become its largest shareholder with a stake of 45 percent, while creditors’ stake would be reduced to 23.1 percent from 42.1 percent. Under the new terms, creditors promised to lend as much as 200 billion won for facility investment and roll over debt for five years. They will also lower interest rates on the debt, which is expected to help Kumho save 23.3 billion won a year.

On top of that, Doublestar pledged to guarantee job security for the existing workers for three years. The Chinese company must hold onto their shares for three years and creditors theirs for five years. Doublestar also must stay the largest shareholder of Kumho until creditors sell their remaining stake.

Shares of Kumho Tire closed Monday up 5.01 percent at 4,925 won.

The creditors also gave the union until Friday to answer to its ultimatum of either accepting the Chinese company as its new owner or facing bankruptcy.

KDB Chairman Lee Dong-gull visited the Gwangju manufacturing base and met with the union Monday to warn that creditors will stop debt moratorium if the union continues to resist restructuring plan that includes wage cuts and the sale to Doublestar.

“The rollover ends if the deal with Doublestar falls through this time as well,” Lee told the Maeil Business Newspaper on Sunday.

The initial deal to sell 42.1 percent stake to Doublestar at 955 billion won last year officially ended in December after delayed process due to protest from union and former parent group Kumho Asiana Group.

By Lee Seung-yoon and Choi Mira

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