GM Details Bailout Plan for South Korean Unit

General Motors Co.’s GM Korea unit has reached preliminary agreements to avert bankruptcy.

Union workers have ratified a deal the company says will cut its annual costs by at least $400 million. GM adds that the state-owned Korea Development Bank, which owns 17% of the affiliate, has agreed to a cash infusion of $750 million.

GM posted a one-time charge of $942 million for restructuring the Korean unit. The affiliate plans to shrink its workforce 9% to 13,000 and reduce capacity 25% by closing its factory in Gunsan next month.

GM has said it will invest $2.8 billion on factory upgrades and new product to ensure stable production levels over the long term. The company also has suggested converting $2.7 billion in GM Korea debt into equity.