The South Korean government has said a pending deal to refinance General Motors Korea should keep the automaker in the country for at least 10 years because its rights to sell shares and assets would be limited.

A Reuters report noted parent company GM and the government agreed a preliminary deal last month to put $4.35bn into the loss making operation to keep it running, albeit with one plant closed and the loss of 3,000 jobs. GM Korea also has agreed a new wages pact with workers.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

Related Company Profiles

View all

"At least 10 years will be guaranteed," Reuters quoted finance minister Kim Dong-yeon saying in a radio interview, adding one key condition of the deal would be Korea Development Bank, which owns 17% of GM Korea, regaining veto power over asset sales.

"We will make sure GM contributes to the South Korean economy by running normal operations for the long term," he said.

Reuters said industry watchers were sceptical this would mean the end of restructuring for GM Korea because the sale of GM Europe brands Opel and Vauxhall last year was expected to hit production levels further.

See Also:

"I expect GM to restructure its South Korean unit on a regular basis," a senior researcher at the Korea Institute for Industrial Economics and Trade, Lee Hang-koo, told Reuters.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Reuters noted the preliminary agreement with GM allows for the state run bank to regain the power to block the sale of more than 20% of GM Korea assets. The right of veto, which had been in place since 2002 when GM acquired failed Daewoo Motors, expired in October.

GM Korea and KDB spokesmen declined to comment to Reuters.

GM Korea CEO Kaher Kazem said in an internal letter, cited by Reuters, it planned to reach a binding, final agreement with the government on Friday.