GM buys all new shares in South Korea unit
SEOUL (Reuters) - General Motors Co bought all of the new shares offered by its struggling South Korean unit for $413 million and the U.S. carmaker will consider further financial aid if necessary, GM Daewoo said on Friday.
GM decided to subscribe to the entire rights offering as other shareholders, including Korea Development Bank (KDB), SAIC Motor Corp and Suzuki Motor, did not join the offering, GM Daewoo Automotive & Technology said.
Last month, GM Daewoo said it would raise 491.2 billion won ($413.4 million) by selling new shares to existing shareholders.
GM would consider more financial help for the South Korean unit, said Nick Reilly, president of GM International Operations.
"Any further actions related to the longer term funding structure of GM Daewoo will be considered if necessary, " Reilly said in a statement.
The decision came as GM and KDB, GM Daewoo's main creditor, failed to reach an agreement in talks over 1 trillion won of additional financial support for the South Korean unit.
KDB had said it wanted the sum of the rights offering more than doubled and that it would not participate in the offering if GM did not meet its requests, such as sharing licenses for cars jointly developed.
"The money came from GM's global operations," said GM Daewoo spokesman Kim Sung-soo.
GM is barred from using any of its own $50 billion lifeline from the U.S. government to support overseas operations and would have to dip into money from its non-U.S. operations.
With the investment, GM's stake in GM Daewoo rises to 70.1 percent from 51 percent, while KDB's stake falls to 17 percent from 28 percent.
GM Daewoo said it would use the proceeds for general purposes, including funding the repayment of maturing debt.
(Reporting by Cheon Jong-woo and Rhee So-eui; Editing by Chris Lewis)