Seoul still in talks with GM over future of Korean unit, minister says

The South Korean government is still closely working with GM on how to revive its Korean unit as the US carmaker is set to shut down one of its four plants in Asia's fourth-largest economy, Seoul's commerce minister has said.

The Detroit-based company announced a restructuring plan for GM Korea in February, including the shutdown of a plant in Gunsan, southern South Korea.

After wage concessions with GM Korea's labor union and intense negotiations with the Korean government, GM and the state-run Korea Development Bank agreed earlier this month to take steps to keep the carmaker afloat.

 "Things related to the Gusan plant have yet to be finalized and more should be done for GM's further investment (in its Korean unit)," Paik Un-gyu, South Korean minister of trade, industry and energy, told reporters Tuesday.

"Our demands are that GM should invest for the future ... and that GM should take advantage of skillful Korean engineers," Paik said. The policymaker said in terms of future cars, South Korea is actually the best market for GM. 

General Motors’ workers at the South Korean Gunsan plant stage a protest against its planned closure on Wednesday, Feb. 14. (Reuters)

The rescue package agreed on earlier this month calls for GM to convert $2.8 billion worth of debt owed by GM Korea into shares and extend fresh loans worth $3.6 billion to the local unit for facility investment.

KDB, the second-largest shareholder of GM Korea, will inject $750 million in cash into GM Korea.

As part of the broad agreement, GM agreed to give the KDB veto power in key management decisions.

Under the deal, GM is banned from selling any of its stake in GM Korea before 2023 and is required to keep its holding in the local unit above 35 percent until 2028.

In exchange for a fresh loan from the KDB, the Detroit carmaker also vowed to allocate two new vehicles to its Korean plants that can ensure steady production going forward. (Yonhap)