General Motors will stay in South Korea for no less than 10 years and install its Asia-Pacific headquarters in the nation, government officials stated on Thursday, describing terms of a deal targeted at rescuing the U.S. automaker’s struggling GM Korea unit.
The U.S. automaker’s Korean unit averted a bankruptcy filing with a wage deal clinched in April, but experts and customers, as well as the South Korean government, have had some uncertainties about GM’s dedication and about how long the loss-making company would stay in business.
As per the agreement, GM can’t sell any of its 77 percent stake in GM Korea during the next five years and can’t let it decrease below 35 percent thereafter until 2028, South Korean Finance Minister Kim Dong-yeon informed a press conference.
The restriction on the stake sale was one of tools that will avoid the automaker from leaving the South Korean market, Kim stated.
He also informed the deal package “paved the way for GM to operate continuously beyond 10 years”, referring to issues that the automaker may leave after 10 years.
The Detroit automaker and state-run Korea Development Bank (KDB) already have a initial deal on $7.15 billion of investments, consisting of $2 billion of capital spending by the automaker and a $2.8 billion debt-for-equity swap for existing loans GM Korea owes to its parent, to save the unit.