GM offers $3.7b investment for unit in S. Korea

SEOUL • General Motors (GM) has proposed an investment of US$2.8 billion (S$3.7 billion) into its loss-making South Korean operations over the next 10 years, and has asked Seoul to provide its share of the funds, a South Korean government official said yesterday.

The US automaker announced last week it would shut down a factory in Gunsan, south-west of Seoul, and that it was mulling over the fate of its three remaining plants in South Korea.

GM owns 77 per cent of its South Korean unit GM Korea, while state-run Korea Development Bank (KDB) owns a 17 per cent stake. GM's main Chinese partner, SAIC Motor Corp, controls the remaining 6 per cent.

The official said GM had asked South Korea to inject funds into GM Korea through KDB. On the basis of its shareholding, KDB would provide around US$476 million in investment.

The US$2.8 billion investment proposal is separate from a roughly US$2.7 billion debt-for-equity swap GM is offering to get financial support and tax benefits from Seoul, the official and a lawmaker said.

South Korean Trade Minister Paik Ungyu told Parliament yesterday that the government had first asked for an audit into GM's "opaque" operations in the country, which directly employ some 16,000 workers.

The head of GM Korea's union said workers will go on a full strike if the US automaker decides to completely pull out of the country.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 22, 2018, with the headline 'GM offers $3.7b investment for unit in S. Korea'. Print Edition | Subscribe