GM Korea Averts Bankruptcy with Tentative Labor Deal

General Motors Co.’s South Korean unit reached a provisional deal with its unionized workers over the weekend, thus averting a bankruptcy filing today.

Details weren’t released. But Bloomberg News reports the two sides agreed to another round of buyouts for workers at the factory in Gunsan that GM Korea intends to close next month. About 1,300 of the 2,000 workers there have already accepted voluntary retirement packages.

A union source tells Bloomberg that workers also wanted job security and objected to executive perks such as company-provided cars.

The tentative agreement clears the way for state-owned Korea Development Bank to move ahead with financial aid. KDB owns 17% of GM Korea and has indicated it will provide short-term loans worth 500 billion won ($469 million), or about 17% of roughly $2.8 billion GM has pledged in plant upgrades and new products to revive the carmaker.

GM also has proposed a $2.7 billion debt-for-equity swap. GM Korea said earlier it needs 500 billion won to meet a loan payment to its parent by the end of April. The company has lost 3 trillion won ($2.8 billion) over the past four years, due largely to slumping demand for its vehicles.