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GM workers opting to retire sign pact pledging not to take legal action for severance pay delay

All Headlines 11:27 April 16, 2018

SEOUL, April 16 (Yonhap) -- GM Korea Co., the South Korean unit of General Motors Co., said Monday that workers who applied for voluntary retirement signed a pact not to take legal action in the event of a severance pay delay.

The U.S. carmaker offered a voluntary retirement program for all 16,000 employees at its South Korean unit after it announced in February that one of its four car assembly plants in the country will be closed by May. It has also sought financial assistance from the state-run Korea Development Bank (KDB), the second-biggest shareholder in GM Korea.

Some 2,600 workers opted to apply for the voluntary retirement package, and the company is scheduled to pay about 500 billion won (US$467 million) to the applicants on April 27.

GM Korea said it needs a total of 2.3 trillion won by the end of April, a figure which includes the 500 billion won needed by April 27, to pay debts to its U.S. parent firm and other GM affiliates.

Last week, GM Korea said it may file for court receivership around April 20 as it is undergoing a liquidity crunch and the union has rejected tough restructuring measures that the carmaker says it needs to stay afloat.

In February, GM proposed converting $2.7 billion debt owed to it by GM Korea into equity and offered to share an investment of $2.8 billion between GM Korea and the KDB. It also suggested allocating two new vehicles to Korean plants.

But the KDB has maintained its initial stance. The state lender said it will decide on support measures for GM Korea depending on the results of ongoing due diligence on the company, which it expects to be completed in early May.

The KDB owns a 17 percent stake in GM Korea, with GM and SAIC Motor Corp. controlling 77 percent and six percent, respectively.

In the three years through 2016, GM Korea posted 1.974 trillion won in accumulated net losses due to a lack of new models and lower demand.

GM workers opting to retire sign pact pledging not to take legal action for severance pay delay - 1


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