The Cost of Saving GM Korea? $2.8 Billion, Report Claims
Amid frantic restructuring designed to keep General Motors’ money-losing Korean operations afloat, the automaker has proposed a $2.8 billion investment, a new report claims.
According to Reuters, a South Korean government official said GM would invest the funds over the span of 10 years, though not all of that money would come from the automaker’s coffers.
The country’s state-run Korea Development Bank (KDB) holds a 17-percent stake in GM’s Korean subsidiary, and is reportedly being asked to provide $476 million in investment. GM Korea announced the impending closure of its Gunsan assembly plant last week, but hasn’t yet decided the fate of three remaining plants in the country.
On Tuesday, Reuters reported on a seperate $2.7 billion debt-to-equity swap proposed by GM as a way of securing government support, as well as tax benefits. Part of the overall rescue plan includes the production of two new models in South Korea, one lawmaker said. The automaker hasn’t confirmed any of these proposals.
While the proposals seem promising, the government remains wary. South Korea’s trade minister, Paik Un-gy, said on Wednesday that the government wants an audit into GM’s “opaque” management in the country, CNBC reports. It’s hoped an audit will determine if GM’s proposals can truly save the operation.
“By opaque we mean the high rate of profits to raw material costs, interest payments regarding loans and unfair financial support made to GM’s headquarters,” Paik told reporters.
Meanwhile, GM’s 14,000 unionized Korean workers are prepared to strike if the automaker decides to pull up stakes in the country, labor boss Lim Han-taek said Wednesday.
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