General Motors’ president stated common ground must be reached on a long-term financial restructuring of the automaker’s South Korean auto unit by next Friday and if there has been none, the operation would likely look forward to bankruptcy protection.
The automaker shocked the country in February with strategies to close one local plant and leaving the fate of three others uncertain. It is looking for government funding and incentives and wage concessions to protect the unit, which just posted an yearly net loss of $1.1 billion, its fourth straight year in the red.
But the April 20 deadline, first given earlier month, looks challenging due to growing tensions with the union and as state-funded Korea Development Bank (KDB) states it needs until early May to finish due diligence on GM Korea and the proposed restructuring.
“Our preferred path is still finding a successful outcome here,” GM President Dan Ammann informed Reuters.
“It’s the right thing for all each of the stakeholders. But everybody has got to come to the table by next Friday.”
Complicating matters, GM Korea must make payments to employees who agreed to quit the company as part of a voluntary severance plan in the week starting April 23. The unit does not have the money to make the payments, and the automaker has so far indicated it will not offer any more cash unless there is a deal with unions and the country’s government.
An interim report on the due diligence is going to come out on April 20, KDB Chairman Lee Dong-geol informed reporters on Friday, adding that meaningful development in talks can be made after that. KDB holds 17 percent of GM Korea.