DETROIT/SEOUL (Reuters) - General Motors Co’s (GM.N) president said common ground must be reached on a long-term financial restructuring of GM’s South Korean auto unit by next Friday and if there was none, the operation would likely seek bankruptcy protection.
GM shocked South Korea in February with plans to close one local plant and leaving the fate of three others unclear. It is seeking government funding and incentives as well as wage concessions to save the unit, which just posted an annual net loss of $1.1 billion, its fourth straight year in the red.
But the April 20 deadline, first given late last month, looks challenging given growing tensions with the union and as state-funded Korea Development Bank (KDB) says it needs until early May to complete due diligence on GM Korea and the proposed restructuring.
“Our preferred path remains to find a successful outcome here,” GM President Dan Ammann told Reuters in an interview.
“It’s the right thing for all the stakeholders. But everybody has got to come to the table by next Friday.”
Complicating matters, GM Korea must make payments to workers who agreed to leave the company as part of a voluntary severance plan in the week beginning April 23. The unit does not have the cash to make the payments, and GM has so far indicated it will not provide any more cash unless there is a deal with unions and the South Korean government.
An interim report on the due diligence will come out on April 20, KDB Chairman Lee Dong-geol told reporters on Friday, adding that