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March 19, 2024

KDB to complete lifeline injection to GM Korea

PUBLISHED : December 14, 2018 - 14:14

UPDATED : December 14, 2018 - 14:14

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[THE INVESTOR] State-run Korea Development Bank said on Dec. 13 it will complete injecting US$750 million into the financially troubled Korean unit of General Motors later this month, ending a controversy over the spin off of its research unit.

The policy bank, second-largest shareholder of GM Korea, and the US carmaker had signed a deal in May to provide a rescue package for the local loss-making unit. Under the agreement, GM agreed to provide an additional US$3.6 billion in fresh loans to keep it afloat. 



KDB had injected US$375 million into GM Korea in June, but said the remaining amount may not be provided if the US carmaker decides to keep only its research facility in the country and eventually shut down all manufacturing facilities.

KDB’s decision came after GM Korea submitted details of its spin-off plans.

The bank said it will buy about 11.9 million preferred shares of GM Korea for 404.5 billion won (US$360 million), at 33,932 won per share. The transaction will be made on Dec. 26.

The May agreement prohibits GM from selling any stake in the Korean unit over the next five years and limits its right to sell shares or assets for 10 years.

By Park Ga-young (gypark@heraldcorp.com)

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