March 28, 2018 / 11:34 PM / a year ago

GM Korea to ask GM to roll over debt, cut interest rate: source

The logo of GM Korea is seen at its Bupyeong plant in Incheon, South Korea March 12, 2018. Picture taken March 12, 2018. REUTERS/Kim Hong-Ji

SEOUL (Reuters) - General Motors’ (GM.N) South Korean unit plans to ask its U.S. headquarters to roll over a debt of 988 billion won ($929.1 million) owed by the loss-making unit and coming due in April, a source with direct knowledge of the matter told Reuters.

GM Korea also plans to ask GM to cut interest rates on loans extended to the South Korean operation, the source said. The plans were approved by GM Korea’s board late on Wednesday, he said.

The move comes after GM, which in February announced plans to shut down one of its factories in South Korea, warned that it would run out of cash in the first quarter.

GM said on Monday its South Korea unit would file for bankruptcy if its union did not agree to cut labor costs by April 20, heaping pressure on workers and the South Korean government to swiftly agree to a rescue plan.

A GM Korea spokesman said GM Korea held a board meeting on Wednesday, but he was not aware of decisions made at the meeting.

In February, GM also agreed to grant temporary relief in repaying a 720 billion won debt coming due that month, the person said.

GM has lent its South Korean unit about $2.7 billion, charging interest of about 5 percent a year, GM Korea’s latest regulatory filing shows.

Reporting by Hyunjoo Jin; Editing by Paul Tait and Stephen Coates

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