If you spent the weekend in a state of breathless suspense, allow us to let some air out of that balloon. General Motors’ embattled Korean division, source of America’s smallest GM cars, has pulled back from the brink of bankruptcy after reaching an 11th hour deal with its union.

The tentative bargain opens the door to government assistance for the money-losing automaker, and should keep wee little vehicles rolling out of the country’s assembly plants.

As we told you last week, company and union executives agreed to continue talks after the automaker’s April 20th wage deal deadline came and went. Ultimately, it seems the union backed down on its pay and bonus demands. The concessions mean the South Korean government can loosen the purse strings on a $500 million cash injection.

In a statement, GM Korea chief executive Kaher Kazem said, “Through the latest agreement, GM Korea will be a competitive manufacturing company.”

We don’t know whether the union fully capitulated, but this certainly looks like a climbdown from its formerly hardline stance. The union hoped that, in addition to its wage and bonus wants, GM Korea would offer a future to soon-to-be-laid-off workers at the Gunsan assembly plant, one of four the automaker operates in the country. (The low-volume plant will be shuttered next month in the face of sinking domestic sales and exports.)

GM Korea, on the other hand, was more concerned with finding $600 million in operating funds. Without that, no deal from the government funding the bank that holds a 17 percent stake in the company.

While this latest news helps the company avoid a bankruptcy filing, the future remains cloudy. The division needs profit, and only product can bring it. Already, we’ve heard word of the replacement of the tiny Chevrolet Spark with an America-bound crossover, as well as other potential new models. At the end of the day, it’ll take billions in development and retooling to bring the company fully back from the brink.

[Source: Reuters] [Image: General Motors]