April 26, 2024

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[THE INVESTOR] The state-run Korea Development Bank said on Dec. 18 it supports GM Korea’s plan to spin off its research unit, marking a reversal from the lender’s opposition to the controversial scheme that is also strongly opposed by the carmaker’s labor union.

Lee Dong-gull, governor of the KDB, told reporters that the bank will drop a legal action against GM Korea over the spin-off plan after the two sides complete talks on the plan’s details. 

Under the plan, GM Korea will set up a new entity that will handle automotive engineering and design, while the parent will focus on manufacturing and sales.

Lee said GM Korea pledged to provide works to the new entity over the next 10 years and the spin-off plan would help GM Korea cut costs.

The KDB’s decision came after GM Korea recently submitted details of its spin-off plan to the bank, the second-largest shareholder of GM Korea.

Last week, the KDB said it will complete its injection of US$750 million into the Korean unit of General Motors later this month.

The KDB and GM signed a deal in May on the rescue package for GM Korea.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)