General Motors President Dan Ammann stated on Monday the automaker’s troubled South Korean operations can be a “sustainable, successful business,” if unions and the South Korean government concur soon on a restructuring.
GM has cautioned Korean officials the unit deals with a “cash crisis” in the first quarter without new financing. Almost 2 trillion won ($1.88 billion) of GM Korea’s debts to its parent company are due by end-March or early April, as per a regulatory filing.
“Time is short and everyone should move with urgency,” Ammann informed Reuters in an interview when asked if March 31 was a due date for action.
The state-funded South Korean Development Bank stated on Monday it had started a due-diligence review of GM’s South Korean unit as part of its choice whether to inject more capital into the money-losing operation.
GM officials have described strategies to invest approximately $2.8 billion in the South Korean operations and convert into equity about $2.7 billion in debt owed by the unit to General Motors, as per Korean government officials and a GM letter read by Reuters.
Ammann stated that if the company, the South Korean government and unions can settle on a restructuring plan “there’s investment in the business, new item programs that we ‘d look to allocate” to South Korea.
“It’s a classical restructuring where everyone has to contribute something in order for everyone to end up in a better place with a sustainable, profitable business.”
New product investments would lead to South Korea developing vehicles that belong to GM’s international product lineup and could be sold in other markets, Ammann stated.
GM on Tuesday asked South Korea to designate its factory site in Bupyeong as a foreign investment zone to be qualified for corporate tax benefits, an official at Incheon Metropolitan City informed Reuters.
The official refused to elaborate more on the automaker’s proposal.