State-run Korea Development Bank (KDB) and General Motors Co. on Friday signed a binding agreement on the rescue package for the U.S. carmaker's local unit, GM Korea Co., an industry source said.
Details of the agreement were not disclosed due to confidentiality obligations, but Friday's signing ended months of uncertainty surrounding GM Korea.
The Detroit-based company announced a restructuring plan for GM Korea in February, including a shutdown of one of its four plants in Asia's fourth largest economy.
After wage concessions with GM Korea's labor union and intense negotiations with the Korean government, GM and KDB agreed earlier this month to take steps to keep the carmaker afloat.
The rescue package calls for GM to convert $2.8 billion worth of debt owed by GM Korea into shares and extend fresh loans worth $3.6 billion to the local unit for facility investment.
KDB, the second-largest shareholder of GM Korea, will inject $750 million in cash into GM Korea.
As part of the broad agreement, GM agreed to give the KDB veto power in key management decisions, KDB officials said.
Under the deal, GM is banned from selling any of its stake in GM Korea before 2023 and is required to keep its holding in the local unit above 35 percent up till 2028. (Yonhap)