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GM Korea drops bankruptcy vote plan – Report

Auto News - Published on Wed, 25 Apr 2018

Image Source: streetinsider.com
Economic Times reported that General Motors Co's South Korean unit dropped a plan for a vote on a bankruptcy filing after reaching a tentative wage deal with its labour union on 23 April that helped the US automaker win concessions on pay, bonuses and benefits.

GM shocked South Korea in February when it unveiled a major restructuring plan for the money-losing unit, which involved shuttering one of its four plants in the country and voluntary redundancies for 2,600 workers.

The automaker had sought wage concessions from the union as well as government funding and incentives to save its remaining three South Korean factories.

The board of GM Korea delayed a decision to file for court-managed bankruptcy protection until Monday evening, after the automaker had failed to reach a wage deal with its labour union in time to meet a Friday deadline.

Mr Kaher Kazem, chief executive of GM Korea, said in a statement in Korean that "Through the latest agreement, GM Korea will be a competitive manufacturing company."

The deal would pave the way for the Korea Development Bank to provide support and for GM to allocate new models to South Korea to help turn around GM Korea, the unit said in a statement.

KDB is GM Korea's second-largest shareholder with a 17 % stake. The US automaker owns 77 % of GM Korea, while GM's main Chinese partner, SAIC Motor Corp, controls the remaining 6 %.

The government had stepped up pressure on GM and the union to reach an agreement, saying without a swift deal some 150,000 jobs at the automaker and its suppliers would be at risk.

GM Korea still needs to negotiate with KDB on terms of the latter's financial support to the unit, while trying to secure tax and other incentives from the industry ministry.

KDB's chairman told Reuters last week the lender may sign a preliminary agreement by April 27 to provide financial support for the business should an interim due-diligence report that was due last Friday turn out to be satisfactory. The status of the report could not be immediately ascertained.

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Posted By : Rabi Wangkhem on Wed, 25 Apr 2018
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