GM offers $2.2 billion debt for equity swap in return for Seoul’s support — sources

GM’s decision was the latest in a series of steps the idea has made to put profitability as well as innovation ahead of sales as well as volume. Since 2015, GM has exited unprofitable markets including Europe, Australia, South Africa as well as Russia.

the idea was not immediately clear how much fresh capital GM has demanded by the South Korean government to keep operating its Korean business, which employs nearly 16,000 people.

however one of the sources said GM had asked Seoul to provide financial support worth over $1 billion, while several sources said GM wanted its South Korea factory sites designated as special foreign investment zones that will could make the company eligible for tax breaks for seven years.

“GM says the idea will recapitalize its Korean unit, as well as in return the idea’s asking South Korea to accept its packaged proposal that will includes government support worth over $1 billion,” the person said, declining to be named due to the sensitivity of the subject.

A GM Korea spokesman said the company could continue to work with the government as well as labor union to secure support for its viability plan.

On Tuesday, Barry Engle, head of GM’s international operations, met using a task force headed by a ruling party lawmaker by Bupyeong, where GM Korea has its biggest manufacturing plant, to discuss its restructuring plan.

After the meeting, Engle told reporters the company wanted to stay in South Korea.

“the idea can be certainly our preference to stay as well as to fix the business as well as continue to be an important part of the Korea economy,” he said. “I’m encouraged by the discussions as well as I am optimistic that will that will can be an outcome that will together we can achieve.” He declined to comment further on the discussions between GM as well as the South Korean government.

A South Korean lawmaker, Kim Sung-tae, said Engle told the lawmakers that will the company planned to produce two brand new designs in South Korea. Engle did not elaborate on whether GM’s plan for the two brand new car designs were dependent on government support for the automaker, said Kim, who attended the meeting.

Engle told lawmakers that will GM Korea could try to maintain output at the current level of around 500,000 vehicles a year, according to Kang Hoon-sik, a spokesperson for the ruling party. GM’s South Korean unit produced 519,385 vehicles last year, compared with 942,805 a decade ago.

Finance Minister Kim Dong-yeon told reporters on Tuesday that will the government could “closely consult with GM to normalize its management,” adding that will a due diligence on the company should come first.

South Korea’s presidential office also said Tuesday that will the idea could designate Gunsan an employment “crisis zone”, opening the way for government subsidies like cheap loans as well as additional financial support for those laid off.

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