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GM, Seoul government agree to invest $7.1 billion in local unit

US auto giant General Motors and the Seoul government agreed to inject a combined $7.1 billion to save the ailing local unit, the company said Thursday.

GM has also agreed to sustain operations here for over 10 years, and grant the state-run Korea Development Bank veto rights.

GM will conduct a $2.7 billion debt-equity swap on GM Korea on top of $4.4 billion investments here, while KDB will take part by investing 800 billion won, according to the share ratio.

GM President Dan Ammann (left) speaks during a meeting with the ruling party’s GM task force committee at the National Assembly on Thursday. (Yonhap)
GM President Dan Ammann (left) speaks during a meeting with the ruling party’s GM task force committee at the National Assembly on Thursday. (Yonhap)

Visiting General Motors President Dan Ammann had said earlier in the day that the carmaker was close to completing an agreement with KDB regarding the funds to help save the ailing Korean unit.

“Over the last few months, over the last few weeks, a lot of very good progress has been made. We stand here today very close to a resolution on most of the important issues,” said Ammann during a 15-minute meeting with the ruling party’s GM task force committee at the National Assembly.

This was Ammann’s first visit to Korea since GM’s decision to shut down Gunsan factory in February.

His trip is widely seen as part of the GM headquarters’ attempts to finalize preliminary signings with the KDB, GM Korea’s second-biggest shareholder, for 700 billion won ($648 million) in funds.

As the GM crisis showed signs of abating upon the Monday agreement reached between the management and the labor union, there have also been calls for GM to allocate electric vehicles or self-driving cars here.

Trade Minister Paik Un-gyu was quoted as saying that such vehicles should be produced here for GM Korea’s remaining factories to be designated as foreign investment zones, alongside other support measures as demanded by the automaker.

Regarding the notion, Hong said, “The government suggested manufacturing (electric vehicles) at Gunsan. But GM said it can’t promise production here, as the total volume of its EVs produced worldwide this year is expected to remain at 35,000 units.”

Meanwhile, 30 workers out of 680 had signed up for the second round of voluntary resignations as of Wednesday. The GM headquarters and the labor union had agreed to receive additional voluntary resignations as part of their compromise.

“(Ammann) did not specify how GM plans to manage some 650 workers who chose to remain at the Gunsan plant, nor did he provide an alternative for EVs and autonomous cars,” Rep. Kim Kwan-young of the Bareunmirae Party, who attended the meeting, told The Korea Herald over the phone.

A bumpy road is anticipated for the union and the carmaker, as the two factories in Bupyeong, Incheon, and one in Changwon, South Gyeongsang Province, have slots for 100 workers.

GM Korea’s unionized labor passed the temporary deal with 67.3 percent approval from 10,223 workers.

By Kim Bo-gyung (lisakim425@heraldcorp.com)
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