February 21, 2018 09:53
Carmaker GM has demanded a sweeping bailout from the Korean government to keep its two remaining factories here open.
It has asked the government and state-run Korea Development Bank for subsidies in return for swapping W3 trillion in loans to the Korean subsidiary into equity and investing another US$2.8 billion over the next 10 years (US$1=W1,074). It is not clear how much money GM is demanding from the government.
The government will decide after a due-diligence study premised on a pledge for long-term investments from GM headquarters in the U.S.
Barry Engle, the head of GM's international operations, met with lawmakers at the National Assembly on Tuesday and said the U.S. automaker wants to stay in Korea. He said the company has prepared a rescue plan that includes a significant investment but needs the cooperation and support of "all concerned parties."
But Engle said keeping the assembly plant in Gunsan open is "impossible." GM Korea announced its closure earlier this month together with the loss of over 2,100 jobs there, because it has been running at less than 20 percent capacity for years and falling. Engle pledged GM would strive to sell the plant if a buyer appears.
Minister of Trade, Industry and Energy Baek Woon-kyu said, "GM must resolve problems with its opaque management and show willingness to make long-term investments to improve operations."
In the meeting, Engle did not go into details about measures to keep the remaining Bupyeong and Changwon plants operating.
A government source said, "GM has offered to invest $2.8 billion over the next 10 years and swap a significant portion of its loans to the Korean subsidiary into equity. GM also asked KDB to cover some of the W700 billion in loans from GM headquarters to the Korean subsidiary that matures late this month."
"The key is to verify whether GM is really interested in keeping the Korean subsidiary alive," the source added. "If the conditions are right, we may pledge support but make the actual payment later."
But Engle has been trying to put the thumb screws on the government for weeks, telling lawmakers Tuesday that the carmaker is not prepared to continue suffering losses for the sake of staying in Korea.
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