General Motors on Friday postponed the due date for the 700 billion won ($650 million) it had loaned to the South Korean unit and withdrew its demand for the Bupyeong factory to be designated as security, the company said.

During GM Korea’s board meeting held at its plant in Bupyeong, Incheon, GM deferred the maturity date until the inspection into the firm’s financial status ends, the company said. The payment was initially due this month.

All eyes were also set on whether GM would continue to ask for the Bupyeong plant as security for the loan, which it reportedly took a step back from.

Due to the ambiguity of GM’s position, however, board members representing Korea Development Bank have called for GM to officially finalize an extension.

The state-run Korea Development Bank is GM Korea’s second-biggest shareholder, holding 17.02 percent of shares and accounting for three of the 10 board members of GM Korea. 

“That GM held off the due date until the joint inspection ends also means it may demand the payment when it runs into an unwanted issue during investigation,” said the KDB.

“We have asked for GM to officially extend the maturity date if GM wants to prove that it truly wants to continue business in Korea.”

A board meeting will be held to officially decide on an extension.

KDB added it has also asked GM to lower the higher-than-market average 5.3 percent interest rate on the loan.

GM Korea confirmed the two updates.

During GM International President Barry Engle’s four-day visit this week, he met with politicians, the head of KDB Lee Dong-gull and vice ministers from the finance and trade ministries to discuss the future of the remaining two factories in Incheon and South Gyeongsang Province.

To look into suspicions raised over GM Korea‘s financial records, Engle agreed on a joint inspection with KDB to be managed by Samil PricewaterhouseCoopers.

Engle reiterated the US automaker’s decision to shut down its Gunsan plant in North Jeolla Province due to operations that had fallen below 20 percent.

Regarding new product allocation, Engle said the headquarters would look into allocating sport utility vehicle production to the Bupyeong factory and a crossover utility vehicle at Changwon, amounting to a combined 500,000 units annually. 

By Kim Bo-gyung (lisakim425@heraldcorp.com)