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(LEAD) KDB presses GM over Korean unit's cost structure

All Headlines 16:04 March 08, 2018

(ATTN: ADDS photo, details throughout)

SEOUL, March 8 (Yonhap) -- The state-run Korea Development Bank (KDB) said Thursday it will not pump new funds into the South Korean unit of General Motors Co. unless the U.S. automaker discloses the cost structure of GM Korea Co.

"To receive fresh funds (from the KDB), GM has to come clean with the cost structure (at GM Korea) among others and set up a viable plan to put the Korean operations back on track. If so, we will give serious consideration to injecting 'new money' into the company," KDB Chairman and CEO Lee Dong-gull said in a press conference.

Due diligence on GM Korea has not started because the U.S. automaker has refused to submit what it calls "very sensitive data" to the South Korean government, Lee said.

In this photo taken March 8, 2018, KDB Chairman and CEO Lee Dong-gull answers questions on talks with GM to turn its South Korean operations around during a press conference at the state bank's headquarters in Yeouido, Seoul. (Yonhap)

"We are still waiting for the submission of the documents," the chairman said. "We have notified GM that the planned due diligence (on GM Korea) should be satisfactory enough for us to grasp GM's broad plans to revive its Korean business in the future," he said.

Working-level negotiations between the Seoul government and GM are under way to start the due diligence, the chairman said, adding the review of accounts is aimed at "figuring out the cost structure and the expense structure of GM Korea to judge whether the carmaker can operate if the U.S. automobile giant's self-rescue plan is carried out."

He made the remarks in the press conference held earlier in the day to announce the government's decisions on the fate of two financially troubled shipbuilders -- STX Offshore & Shipbuilding Co. and Sungdong Shipbuilding & Marine Engineering Co.

The KDB is the second-biggest shareholder in GM Korea with a stake of 17 percent, with GM and SAIC Motor Corp controlling 77 percent and 6 percent, respectively.

The state lender has been in talks with GM to find ways to turn the loss-making Korean operations around after the carmaker announced on Feb. 13 it will shut one of its four car assembly plants in Korea by May due to low productivity and high costs, and decide on the fate of the remaining plants within weeks.

Last month, GM also asked the KDB to inject fresh capital into GM Korea to facilitate a turnaround. In 2017, GM Korea's sales fell 12 percent on-year to 524,547 vehicles, with its four plants producing 520,000 cars out of a total capacity of 910,000.

PricewaterhouseCoopers will carry out the detailed review on behalf of the KDB with an aim to finish the process by the end of April, according to the state lender.
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