Following near bankruptcy and a last-minute deal to save the unit, GM Korea lives on. The entity will now issue $804 million worth of preferred stock, Reuters reported on Tuesday.
Preferred stock takes priority over common stock and often have a dividend that must be paid out before dividends to common shareholders. The stock often does not carry voting rights, either.
Preferred stockholders normally receive priority to a company’s assets in the event a company liquidates as well.
GM Korea survived waves of negotiations with the state-owned Korea Development Bank and the local auto union. Ultimately, the union agreed to massive concessions and the KDB agreed to co-invest alongside parent company, General Motors. Between GM and the KDB, GM Korea received a $7 billion bailout.
GM will also invest $2 billion over the next 10 years and another $1.6 billion for corporate restructuring and operations. As promised in the past, GM will also conduct a debt-to-equity swap totaling $2.2 billion. The move will save GM Korea $110 million in interest payments a year.
Not included in the final bailout agreement was a plan to save the Gunsan plant. The manufacturing facility is still scheduled to close.