Following its sell-off to China’s state-run tiremaker Qingdao Doublestar, Kumho Tire recently requested the government to cancel its designation as a defense-related company.
Kumho Tire
The tiremaker is categorized as a defense industry company as it manufactures tires for fighter planes. Kumho Tire makes some 1.6 billion won ($1.4 million) annually from the related business.
Separately, creditors of Kumho tire such as Korea Korea Development Bank are reportedly planning to sell the company’s defense-related business to the third party in Korea for continued business management and stable operation.
According to the Ministry of Trade, Industry and Energy, Kumho Tire requested on May 2 to cancel the designation, citing business management reasons.
The minister of industry holds the final right to approve the sale of a defense-related company. The ministry said Tuesday that the request is currently under review.
Sources said Kumho Tire’s such request indicates the creditors’ effort to separate its non-defense-related and defense-related businesses, therefore speeding up the sales finalization process involving the Chinese company.
Kumho Tire, South Korea’s No. 2 tiremaker by sales, ended a standoff with its labor union on April 1, with the union agreeing to accept foreign investment and preventing the debt-ridden company from filing for court receivership.
Earlier this month, the company released a statement that it would continue supplying tires to carmakers worldwide. The company has supplied tires to automakers such BMW, Mercedes-Benz and Volkswagen.
By Kim Da-sol (ddd@heraldcorp.com)