GM Korea is to face an aggravating financial situation over the next two months, amid escalating protest from its labor union and a tug-of-war between its headquarters and the local government.
The company must come up with ways to pay a combined 2.3 trillion won (US$213 million) for voluntary resignations and loans.
The maturity date for the 700 billion won GM Korea borrowed from its headquarters expires later this month.
The automaker’s board members agreed last month to postpone the loan’s due date by a month while the Korea Development Bank and GM conduct due diligence on the automaker’s financial records.
Between April 1 and 8, GM Korea also has to pay back loans worth 980 billion won along with interest of up to 5.3 percent to affiliates and the headquarters, according to an audit report on GM Korea.
By the end of April, the automaker needs to pay 500 billion won in cash to 2,500 workers who applied for voluntary resignations last week.
Incentive payments of some 72 billion won for last year are also due in mid-April.
“The most realistic solution is for GM to approve converting the local unit’s debt into equity. This is up to the headquarters,” said Kwon Soon-wu, an analyst at SK Securities.
As GM International President Barry Engle is expected to visit the country this week, the scope and other details of the inspection are expected to be finalized.
News reports said on March 6 that the GM headquarters had requested the state-run KDB, the second-largest shareholder of GM Korea, to partially cover 85 billion won out of 500 billion won for voluntary redundancies.
But the KDB denied receiving such a request, while GM Korea said, “We have asked KDB to discuss our financial difficulties.”
Meanwhile, GM Korea’s labor union urged the government to withdraw the shutdown of the Gunsan plant, to conduct due diligence with an agency it selects along with a tax audit into the automaker.
Regarding its stance for the fourth round of wage talks slated for March 7, “the union won’t agree or disagree with the terms the company suggests tomorrow. Rather we plan to work through the negotiation based on conditions the union puts together, which will be specified next week,” said Jung Hae-chul, the union’s policy director, at a press conference in western Seoul.
Following the press conference, the union requested meetings with representatives of the KDB, National Tax Service and National Assembly, and simultaneously staged one-man rallies in front of the institutions and the US Embassy in central Seoul.
By Kim Bo-gyung/The Korea Herald (email@example.com