GM Korea's main shareholders and creditors are to sign a new funding agreement this week to support the ailing General Motors South Korean unit, according to local reports.
General Motors and state run Korea Development Bank (KDB) said they expect to sign an initial funding agreement in the next few days that would allow the insolvent operation to meet its ballooning short term obligations (such as payroll and bonuses) and continue to operate.
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This followed a tentative 11th hour agreement between GM Korea's management and unionised workers overnight on Sunday covering further voluntary redundancies and the relocation of workers from Gunsan to other plants in the country.
GM had said earlier said it would not provide additional funds unless unions backed a restructuring plan involving the closure of the Gunsan plant.
The KDB looked set to provide a fresh KRW500bn (US$464m) loan to GM Korea, subject to the outcome of its due diligence audit, a company official reportedly told Yonhap News Agency. General Motors was expected to agree to this deal.
General Motors was also said to have already agreed to spend US$2.8bn to help maintain capacity at the three remaining assembly plants above a combined 500,000 units a year until at least 2027.
Total production last year was 520,000.
GM had also proposed converting US$2.7bn in debt it is owed into equity but KDB so far had not agreed to this proposal as it would severely dilute its 17% equity holding and wipe out its influence.
