By Kim Jung-hwan and Kim Hyo-jin
GM Korea will recapitalize by allocating new issues worth 4.29 trillion won ($3.99 billion) in preferred shares to parent group General Motors and state-run Korea Development Bank according to their stake ratio as part of the bailout agreement signed earlier this month.
GM Korea said in a disclosure on Monday it plans to raise 4.29 trillion won by issuing 126.2 million preferred shares that lack voting rights as a follow-up measure to the business normalization agreement between the Detroit carmaker and KDB, the lead creditor and major shareholder of the Korean unit.
The two sides agreed on a $7.15 billion rescue package, which includes a $2.7 billion equity swap in the debt GM Korea owes to its U.S. parent. They also agreed to invest a combined $4.35 billion in the local unit over the next 10 years, with GM to finance $3.6 billion in loans and KDB to inject $750 million based on its 17 percent stake in the company.
GM also announced it would relocate its Asia-Pacific headquarters from Singapore to Korea as a sign of its commitment to reviving the Korean operations.
Meanwhile, the labor ministry demanded GM Korea directly employ 774 illegally dispatched workers at its Changwon plant. The carmaker could face a fine of up to 7.74 billion won if it does not comply by July 4.