The South Korean government and General Motors Co. agreed to provide a total of US$7.15 billion in fresh investment for the U.S. carmaker's struggling local unit, officials said Thursday.
Under the agreement, GM will convert $2.8 billion owed by GM Korea Co. into shares and extend loans worth $3.6 billion for the local unit for facility investment, South Korean Finance Minister Kim Dong-yeon told reporters.
State-run Korea Development Bank (KDB), the second-largest shareholder of GM Korea, will inject $750 million into the GM's loss-making unit by the end of this year. The funds will be used to keep the company running.
GM will be banned from selling any of its stake in GM Korea over the next five years to prevent it from exiting the South Korean market, Kim said.
From 2023 to 2028, GM will be required to keep its holding in GM Korea above 35 percent, Kim said.
GM also pledged to allocate two new vehicles to its Korean plants and agreed to give the KDB veto power in key management decisions, making it impossible to leave the country.
In February, GM unveiled its restructuring plan for GM Korea, saying it would shut down one of its four plants in South Korea by May.