Unloading Assets
Rumors about the shutdown of GM Korea are circulating again, with the Korea Development Bank (KDB) announcing that it would dispose of its shares of the five non-financial companies in which its shareholding ratio exceeds 15 percent in three years to come. At present, the KDB has a 17.02 percent share in GM Korea.
The KDB became the second-largest shareholder of GM Korea, while GM acquired Daewoo Motors in 2002. Since then, the bank has supported the automaker each time the latter faced a crisis. For example, it provided a long-term loan of 500 billion won (US$441 million) in 2003, when the company recorded 255 billion won (US$225 million) in operating losses. Seven years later, it provided another 1 trillion won (US$882 million) to urge the GM headquarters to assign a bigger role to the company for its long-term development. In 2013, it was opposed to GM’s decision to withdraw the Chevrolet brand from Europe in view of the car maker’s high reliance on the European market.
The KDB has been a pain in the neck on the part of GM. This is why GM has tried to run GM Korea on its own, by acquiring the KDB’s shares in the company. In October 2012, former GM International Operations chief Tim Lee met with former chairman of the bank Kang Man-soo to discuss the issue. GM tried to talk it over with the KDB in 2013 as well, but the latter declined for reasons such as employment and the possibility of a cut in local production volume.
GM Korea is likely to end up in the hands of GM though, because the contract stipulates that no one but GM can acquire GM Korea until 2017. Then, GM Korea can do nothing against GM’s decision not to manufacture vehicles in Korea. The headquarters recently said that it would opt for other countries like India if GM Korea failed to curtail its production costs.