General Motors has now proposed a $2.8 billion investment over the next 10 years to remain in South Korea, according to a Reuters published on Tuesday. The report added that the investment is a separate offer from the $2.2 billion debt to equity swap offer GM also presented to government officials.
The automaker would allocate the $2.8 billion over 10 years to secure its operations for the time, but GM has asked South Korea to pump in $476 million towards the investment through the state-owned Korean Development Bank (KDB). Additionally, the automaker has also reportedly asked for a generous credit instrument at more favorable interest rates. KDB has refused such a concession in the past and asked for more representation on GM Korea’s board of directors—GM never obliged.
South Korean rade minister, Paik Un-gyu, told parliament he wants an audit into GM’s operations before committing to the co-investment plan. He also wants concrete assurance of GM’s intentions if the plan moves forward.
All of the negotiations stem from GM’s decision to close its Gunsan plant in the country, which employs 2,000 workers. The plant has run at 20 percent of capacity for years, though it’s capable of producing 250,000 vehicles annually. GM has consistently lost money with its GM Korea subsidiary, and the automaker has been keen to drop unprofitable businesses as of recent.
GM has also reportedly teased the possibility of two new vehicles for Korean assembly, though it’s unclear if the product allocation rests on finalizing one or more of the proposed deals.