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The Korea Herald
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THE INVESTOR
March 28, 2024

Automobiles

GM must stay in Korea for at least 10 years: KDB

  • PUBLISHED :April 24, 2018 - 10:16
  • UPDATED :April 24, 2018 - 10:23
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[THE INVESTOR] The Korean government is pulling out all stops to make sure an eat-and-run situation with GM Korea is avoided.

State-run Korea Development Bank -- the second-largest shareholder of the carmaker -- has informed GM that it must stay in Korea for at least 10 years in order for it to pitch in for the restructuring expenses.


(From left) GM Korea CEO Kaher Kazem, GM Executive Vice President Barry Engle and Rep. Hong Young-pyo of the ruling Democratic Party pose after announcing their tentative agreement at GM Korea’s Bupyeong plant on April 23.



The government also demanded corporate voting rights even if its stake goes down. Further, KDB promised to fork over 500 billion won (US$464.56 million), but will make it official only after it gets the final report on GM’s due diligence.

These conditions were laid out after GM Korea’s management struck a deal with the union on April 23 after missing numerous deadlines to help keep the company afloat and avoid court receivership.

The main sticking points had been how to deal with the 680 workers who had chosen to remain at Gunsan factory, which will be shut down by May.

The related parties -- including GM Executive Vice President Barry Engle, GM Korea’s union leader Lim Han-taek and Vice Labor Minister Yi Sung-ki -- agreed to relocate these workers to other plants and also accept additional voluntary resignations.

Four-year unpaid leave was pushed off the table, and a committee is to be formed for GM Korea’s Bupyeong factory to discuss future allocation of models. The labor union also demanded additional tweaks in welfare benefits.

An interim due diligence report had showed GM Korea being more profitable when kept out of court receivership, rather than being liquidated. Final results are still pending.

By Song Seung-hyun and Kim Bo-gyung
(ssh@heraldcorp.com) (lisakim425@heraldcorp.com)

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