GM Korea to ask GM to roll over debt, cut interest rate: source

[SEOUL] General Motors' South Korean unit plans to ask its US headquarters to roll over a debt of 988 billion won (S$1.2 billion) owed by the loss-making unit and coming due in April, a source with direct knowledge of the matter told Reuters.

GM Korea also plans to ask GM to cut interest rates on loans extended to the South Korean operation, the source said. The plans were approved by GM Korea's board late on Wednesday, he said.

The move comes after GM, which in February announced plans to shut down one of its factories in South Korea, warned that it would run out of cash in the first quarter.

GM said on Monday its South Korea unit would file for bankruptcy if its union did not agree to cut labour costs by April 20, heaping pressure on workers and the South Korean government to swiftly agree to a rescue plan.

A GM Korea spokesman said GM Korea held a board meeting on Wednesday, but he was not aware of decisions made at the meeting.

In February, GM also agreed to grant temporary relief in repaying a 720 billion won debt coming due that month, the person said.

GM has lent its South Korean unit about US$2.7 billion, charging interest of about 5 per cent a year, GM Korea's latest regulatory filing shows.

REUTERS