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(LEAD) KDB not 'unconditionally' opposed to GM Korea's spin-off plan

All Headlines 14:37 October 22, 2018

(ATTN: ADDS remarks, details in last 4 paras)

SEOUL, Oct. 22 (Yonhap) -- The head of the state-run Korea Development Bank (KDB) said Monday he is not "unconditionally" opposed to a controversial plan by General Motors Co.'s Korean unit to spin off its research unit.

Lee Dong-gull, governor of the KDB, also told a parliamentary audit meeting that GM Korea notified the KDB of the spin-off plan earlier this year when the two sides were in talks over a rescue package for GM Korea.

GM Korea's shareholders approved the spin-off plan Friday, sparking concerns that the U.S. carmaker may keep only its research facility in South Korea and eventually shut down its manufacturing facilities here.

"We are not unconditionally opposed to the spin-off," Lee said, adding that the spin-off plan could benefit GM Korea.

(LEAD) KDB not 'unconditionally' opposed to GM Korea's spin-off plan - 1

However, the KDB filed an injunction, which was rejected, against Friday's shareholder meeting to try to prevent GM Korea from unilaterally pushing ahead with a spin-off plan, Lee said.

The KDB is asking GM Korea to submit a business plan after the spin-off, and the bank will take legal action against GM Korea unless the carmaker does so, Lee said.

In February this year, GM unveiled a restructuring plan for the loss-making GM Korea, including shuttering one of its four plants in South Korea.

GM and the KDB, the second-largest shareholder of GM Korea, signed a binding pact in May on the rescue package for GM Korea. Under the agreement, the KDB injected US$750 million, while GM will provide $3.6 billion in fresh loans to keep GM Korea afloat.

The agreement prohibits GM from selling any stake in GM Korea over the next five years and limits GM's right to sell shares or assets for 10 years.

Of the $750 million, KDB injected $375 million into GM Korea in June and the remaining half will be provided by the end of this year, Lee said.

Lee told lawmakers that KDB could not inject the remaining $375 million into GM Korea but emphasized the lender's top priority is to ensure that GM remains in South Korea at least for 10 years.

Asked whether he agrees with concerns that the spin-off plan is GM's efforts to exit South Korea, Lee replied, that he did not share the assessment.


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