GM Korea avoids bankruptcy with tentative wage deal

The long-running saga surrounding the General Motor’s Korean unit’s labor situation seems to have finally come to a resolution.

The GM unit said it has reached a tentative wage deal with its labor union.

That was a key condition laid down by the U.S. automaker to prevent the unit from filing for bankruptcy.

GM Korea's board has dropped its plan to vote on Monday on a bankruptcy plan, a GM Korea spokesman said.

The U.S. automaker said in February it had a major restructuring plan for the money-losing unit, which involved closing one of its four plants in the country and job cuts.

GM wanted wage concessions from the union as well as government funding and incentives to save its remaining three South Korean factories.

"Through the latest agreement, GM Korea will be a competitive manufacturing company," Kaher Kazem, chief executive of GM Korea, said in a statement in Korean.

Korea Development Bank is GM Korea's second-largest shareholder with a 17 percent stake. The U.S. automaker owns 77 percent of GM Korea, while GM's main Chinese partner, SAIC Motor Corp, controls the remaining 6 percent.

The unit still makes more than 1 million assembled or partially assembled vehicles for the United States, European and emerging markets. They include the Chevrolet Trax and its sibling, the Buick Encore, which are sold in the United States.

Reuters contributed to this article.