General Motors, Seoul agree to $7 billion bailout for South Korea unit

Under the deal, GM will remain in South Korea for at least 10 years, with KDB regaining veto power over GM’s rights to sell assets in the country. (Reuters)
Updated 10 May 2018

General Motors, Seoul agree to $7 billion bailout for South Korea unit

SEOUL: US auto giant General Motors and Seoul have agreed on a multi-billion-dollar bailout for the firm’s troubled South Korean unit, a government minister said Thursday.
GM is the largest US automaker and one of the biggest players in the global industry but its South Korean subsidiary is loss-making and has seen production fall by almost half in the last decade.
Earlier this year GM Korea announced a plan to shut down Gunsan, one of its four plants in the country, and lay off some 2,000 personnel, sparking a prolonged strike and negotiations with the authorities.
Workers and management reached a deal last month on job and welfare payment cuts and a wage freeze across the firm, paving the way for Thursday’s announcement.
The US parent will inject $6.4 billion into GM Korea and the state-owned Korea Development Bank (KDB) will plow in another $750 million, finance minister Kim Dong-yeon told journalists.
GM will invest $2 billion in facilities over 10 years and spend $1.6 billion on corporate restructuring and operational costs.
An existing $2.8 billion loan to GM Korea will be converted into preference shares, saving the unit 150 billion won ($110 million) in interest every year.
GM currently owns 77 percent of GM Korea and KDB has a 17 percent stake, with the remaining shares held by China’s SAIC Motor.
The firm was rebuilt from the wreckage of local automaker Daewoo, which went bankrupt in 2000.
But production has fallen from 940,000 cars in 2007 to 520,000 last year, when GM Korea lost some $139 million in South Korea.
“We hope that GM Korea carries out this bailout package faithfully so that it may become a success story,” Kim said.
“If GM Korea fails to turn around, 150,000 jobs will be threatened and some 3,000 suppliers will be in difficulties,” he added.
Under the deal, GM will remain in South Korea for at least 10 years, with KDB regaining veto power over GM’s rights to sell assets in the country.
GM also pledged to allocate two new models to its Korean plants.
In its first-quarter results last month GM took a $942 million hit for the cost of closing the Gunsan facility.


Arab News recording exposes Nissan lawyer’s lie on IMF bailout for Lebanon

Updated 01 June 2020

Arab News recording exposes Nissan lawyer’s lie on IMF bailout for Lebanon

LONDON: Arab News has published the recording of an interview with a Nissan lawyer after he denied saying that a bailout of Lebanon by the International Monetary Fund (IMF) was linked to the extradition of fugitive tycoon Carlos Ghosn.

The former Nissan chairman fled to Beirut in December from Japan, where he faced charges of financial wrongdoing.

In a story published in Arab News Japan on Saturday, Sakher El Hachem, Nissan’s legal representative in Lebanon, said the multibillion-dollar IMF bailout was contingent on Ghosn being handed back to Japan. 

The lawyer said IMF support for Lebanon required Japan’s agreement. Lebanese officials had told him: “Japan will assist Lebanon if Ghosn gets extradited,” the lawyer said

“For Japan to agree on that they want the Lebanese authorities to extradite Ghosn, otherwise they won’t provide Lebanon with financial assistance. Japan is one of the IMF’s major contributors … if Japan vetoes Lebanon then the IMF won’t give Lebanon money, except after deporting Ghosn.”

On Sunday, El Hachem denied making the comments. “The only thing I told the newspaper was that there should have been a court hearing on April 30 in Lebanon, but it was postponed because of the pandemic,” he said. In response, Arab News published the recording of the interview, in which he can be clearly heard making the statements attributed to him. 

Japan issued an arrest warrant after Ghosn, 66, escaped house arrest and fled the country.

Now listen to the recording: