[Aju News DB]
SEOUL -- Korea Development Bank, a state policy lender, offered to extend a short-term bridge loan to the South Korean branch of General Motors Wednesday as a due diligence team started digging into its accounting book before considering a bailout.
The bank said it would short-lend some of GM Korea's operating funds if the American company provides sufficient information, reliable collateral and sincere cooperation for due diligence that would last until the end of April.
Korea Development Bank (KDB) also urged GM to give a firm pledge about the proposed allocation of new models to its branch in South Korea. The bank has offered to consider injecting "new money" only if GM provides accounting data on its cost structure. KDB hold a 17 percent stake in GM Korea.
GM has asked the South Korean government to designate its factory sites as foreign investment zones that would make it eligible for seven years of tax and other benefits.
A Realmeter survey showed that a majority of taxpayers opposed an unconditional bailout to GM Korea.
In earlier negotiations, GM suggested it could produce two new models in South Korea, convert 2.7 billion US dollars in debt owed by its Korean operation into equity in exchange for financial support. KDB is reluctant to endorse a debt-equity swap, insisting GM should take its responsibility for poor management.
GM described its decision on February 13 to close one plant in Gunsan by the end of May as inevitable for the restructuring of its global business. GM Korea has been hit by falling sales as well as rising cost and debt. GM officials have complained about excessive demands and union activities by workers.
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