$7.2 Billion Rescue Plan Finalized for GM Korea

General Motors Co. has finalized a $7.2 billion plan to avert bankruptcy for its ailing GM Korea unit.

South Korea’s Ministry of Strategy and Finance announced the deal earlier today. Under the agreement, GM will convert $2.8 billion in outstanding loans to the subsidiary into non-voting preferred stock by year-end. GM also will provide $3.6 billion in new loans to the unit.

The loans will include $2.8 billion for capital investment and product development over 10 years.

State-run Korea Development Bank will buy $750 million worth of the newly issued preferred stock. KDB will retain its 17% stake and voting rights in GM Korea. GM will continue to own 77% of the company. China’s SAIC Motor will maintain its 6% equity in the business.

GM Korea will go through with plans announced in February to close one of its factories, an underutilized assembly plant in Gunsan that makes Chevrolet Cruze sedans and Orlando MPVs, by the end of this month.