It is yet to be determined how the proposal will impact Korea Development Bank, a state run bank, which holds a 17% stake in GM Korea.
According to 4 sources with direct knowledge of the matter, General Motors has offered to convert the nearly $2.2 billion debt of its ailing South Korean operation into equity, in exchange for tax benefits and financial support from Seoul.
The proposal comes midst a restructuring plan by the Detroit-based automaker, which it announced last week saying it would shut its plant in the South Korean city of Gunsan by May 2018 as well as decide the future of its remaining 3 plants in the country within the coming weeks.
GM’s debt for equity swap proposal will allow it to continue to do business in South Korea.
It is not clear how this proposal would impact the state-run Korea Development Bank, which has a 17% stake in GM Korea.