The state-run Korea Development Bank is set to complete injecting $750 million into the South Korean unit of General Motors Co. on Wednesday, after it backed a plan by GM Korea to spin off the carmaker’s research unit.
The KDB and GM signed a deal in May on the rescue package for GM Korea. Under the agreement, the KDB pledged to inject $750 million, while GM agreed to provide $3.6 billion in fresh loans to keep GM Korea afloat.
In June, the KDB injected $375 million into GM Korea, but the bank had previously said the other half may not be provided amid concerns that the U.S. carmaker may only keep its research facility in South Korea and eventually shut down its manufacturing facilities here.
Earlier this month, the KDB reversed its stance for the spin-off plan, saying it would help GM Korea improve its profitability.
On Wednesday, the KDB plans to buy about 11.9 million preferred shares of GM Korea for 404.5 billion won ($358.9 million), or 33,932 won per share.
A KDB official said the bank has dropped its legal action against the spin-off plan.
GM Korea has said the research unit, named the GM Technical Center Korea, Ltd., will be established next Wednesday, and around 3,000 employees will work in the spun-off company.
The May agreement prohibits GM from selling any stake in GM Korea over the next five years and limits GM’s right to sell shares or assets in GM Korea for 10 years. (Yonhap)