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GM Korea at odds with state-run bank over due diligence for aid


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GM Korea at odds with state-run bank over due diligence for aid

General Motors Co. is not sharing the company's internal information required for due diligence, which has led to tensions between the U.S. automaker's South Korean wing and the Korea Development Bank, Reuters reported, citing South Korea Vice Finance Minister Ko Hyoung-kwon.

The audit of GM Korea's finances is meant to provide the South Korean government sufficient information to determine whether it should offer aid to the unit.

"In order to carry out due diligence, which is a difficult process, we need company information but I think [GM Korea] finds it difficult to share information about global strategies," Ko reportedly said.

In a bid to encourage the automaker to share its internal information, the government-run Korea Development Bank, also the second-biggest shareholder of GM Korea with a 17% stake, extended an offer of short-term loans to the troubled South Korean unit after April, contingent upon its willingness to cooperate.

General Motors has proposed the conversion of nearly $2.7 billion owed by GM Korea into equity in return for financial aid from Seoul, which the Big Three carmaker has sought.

GM Korea also said the company might suffer from a first-quarter "cash crisis" if major shareholders did not offer funding, according to the report. The unit has already announced that it would shut down its Gunsan facility by the end of May as part of its restructuring plan.

The automaker had also declared that it would cut between 5,000 and 11,000 jobs in South Korea, from nearly 16,000, which would affect facilities besides the Gunsan plant, according to Reuters.