GM Korea has been thrown a lifeline, with the Korea Development Bank (KDB) indicating it will help to fund the company’s restructuring and investment.
Lee Dong-gull, CEO of the state-owned KDB, has told Reuters it could inject 500 billion won ($609 million) into GM Korea. He said an agreement could be reached as early as April 27, but is subject to due diligence being completed.
Last week, Dan Ammann told Reuters it needed its partners to come to a broad consensus by April 20, otherwise it would seek bankruptcy protection for its South Korea unit, which has lost money for four straight years, notching up a US$1.1 billion ($1.4 billion) loss in the most recent financial year.
As part of the 2011 rescue of Daewoo Motors, GM bought 77 per cent of the ailing automaker, with the remainder taken on by the KDB (17 per cent) and, GM’s partner in China, SAIC (6 per cent).
Top: Holden Spark. Above: Holden Astra sedan.
In February, GM revealed a restructuring plan for its Korea arm, including closing one of its three factories, and slashing headcount via voluntary redundancy packages.
While the American automaker also pledged to invest US$2.8 billion over 10 years, it has since faced stiff opposition from the country’s unions.
Prior to this, GM sold its loss-making European operations, including the Opel and Vauxhall brands, to Peugeot and Citroen’s parent company, the PSA Group. It has also closed down money-losing operations in South Africa, other parts of Africa, and India.
Vehicles made by GM Korea and sold in Australia include the Holden Barina, Spark, Astra sedan and Trax.
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