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Gov't says GM's 'sustainable' plan for S. Korean unit essential for financial support

All Headlines 15:37 March 14, 2018

SEOUL, March 14 (Yonhap) -- The chief of South Korea's financial regulator said Wednesday the government's financial support will be possible if General Motors Co. outlines a "long-term and sustainable" plan to turn its loss-making Korean unit around.

In a press conference held in Seoul, Financial Services Commission Chairman Choi Jong-ku said the government and the state-run Korea Development Bank understood that GM strongly wants to maintain its production facilities in Korea.

"The government's financial support depends on how long-term, sustainable and specific the plans GM will come up with to revive its Korean unit are," he said.

In this photo taken March 14, 2018, Financial Services Commission Chairman Choi Jong-ku answers questions on the government's stance on possible financial support to GM Korea and the planned sale of Kumho Tire to China's Qingdao Doublestar at a press conference held in Seoul. (Yonhap)

This week, PricewaterhouseCoopers began conducting due diligence on the GM's Korean unit on behalf of the KDB-led creditors, with an aim to complete the review by the end of April. Any fresh loans to GM Korea will be decided according to the review results.

The Detroit carmaker asked for financial help from the KDB after announcing on Feb. 13 its plan to shut one of its four car assembly plants in Korea by May and decide on the fate of the remaining plants within weeks.

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.

As for the KDB's planned sale of Kumho Tire Co. to China's Qingdao Doublestar Co., the chairman urged the tiremaker's union to accept the plan.

"To help Kumho Tire stay afloat and put it back on track, it is the only option (for creditors led by the KDB) to sell it to Doublestar. The union needs to understand what the reality is and closely cooperate with the company (to avoid a court receivership)," Choi said.

Unless the union agrees to the company's M&A plan and accepts reductions in wages and work benefits by the end of this month, the country's second-largest tiremaker will be placed under court receivership, the KDB said.


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