GM Korea avoids court protection as union OKs self-help plan

SEOUL, April 23 (Yonhap) -- Unionized workers at GM Korea Co., the South Korean unit of General Motors Co., on Monday tentatively agreed on restructuring measures, enabling the carmaker to avoid being placed under court protection. GM Korea and its union held 14 rounds of talks in the past two and a half months to narrow differences on a package of self-help measures that include a planned shutdown of a local plant, wage freeze, no bonuses and the suspension of some work benefits. "Ratification of the tentative agreement is critical to our viability plan and securing support of the Korean government and our shareholders, the Korea Development Bank and GM," GM Korea president and Chief Executive Kaher Kazem said in a statement. The labor union has demonstrated its commitment and the company will continue to work with its other key stakeholders to gain their support, Kazem said. The company had originally set the deadline for an agreement from the union at midnight Friday, but it was delayed to 5 p.m. Monday after Finance Minister Kim Dong-yeon urged the two sides to find common ground through "swift but sincere dialogue" and to avoid jeopardizing 150,000 local jobs at the carmaker and its subcontractors. In February, GM said it will shut one of its four car assembly plants in Korea by the end of May, while asking GM Korea workers to make some wage concessions and the Korean government to extend a financial helping hand to put its loss-making Korean unit back on track. The Detroit carmaker 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 state-run KDB. It also suggested allocating two new vehicles to Korean plants. The KDB is the second-largest shareholder of GM Korea with a stake of 17 percent, with GM and SAIC Motor Corp. controlling 77 percent and six percent, respectively. The KDB has said it could inject about 500 billion won (US$470 million), or 17 percent of the $2.8 billion, into GM Korea if the two sides agree to proceed with restructuring measures and the state lender finds the results of due diligence on the GM unit satisfactory. Some 2,600 employees out of GM Korea's total workforce of 16,000 have filed for voluntary retirement, as the Detroit carmaker has stepped up the restructuring of its Korean unit. 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. kyongae.choi@yna.co.kr (END)