U.S. automaker General Motors Co. on Wednesday signed an agreement with South Korea's Korea Development Bank (KDB) for the long-term development of its South Korean unit GM Daewoo Auto & Technology.
According to the agreement, GM pledged to guarantee redemption of GM Daewoo's preferred shares owned by creditors, GM Daewoo said in a statement.
It also includes giving back KDB, GM Daewoo's second-largest shareholder, the right to name three members to GM Daewoo's Board of Directors.
"The agreement also resolves issues on the revision of the Cost Share Agreement between GM and GM Daewoo," the company said without elaborating.
The agreement puts an end to months of negotiations between General Motors and the South Korean bank on development plans for GM Daewoo.
KDB earlier demanded GM to show its long-term commitment to its South Korean unit, including guarantees for GM Daewoo's future sales volumes, and threatened to retrieve its 1.12 trillion won (US$984 million) loan to GM Daewoo unless its demands were met.
GM Daewoo said last week that it has decided to fully repay the outstanding loan before the end of the month.
Tim Lee, president of GM International Operations, said Wednesday's agreement will guarantee the continued development of GM Daewoo while meeting the demands of its second-largest shareholder.
"We have aggressive business plans for our Korean unit in the domestic market as well as the international arena," the GM executive was quoted as saying shortly after signing the deal with KDB chief Min Euoo-sung.
Min also hailed the agreement.
"We are happy to ascertain GM's intent on its commitment to GM Daewoo during the negotiations," he said. "KDB and GM will maintain the relations
as cooperative partners for GM Daewoo's long-term success."