GM Korea, union fail to reach agreement before Friday deadline

SEOUL (Reuters) - Wage talks between General Motors' (NYSE: GM) South Korean unit and its labor union ended without an agreement on Thursday, a day before the deadline the company had set for filing for bankruptcy.

The Detroit carmaker had said that its loss-making South Korea unit was likely to file for bankruptcy protection if it failed to reach a restructuring agreement by Friday.

GM said in February it would shut down one of its plants in Korea, and it has been seeking wage concessions and government help to save its remaining three factories.

"The two sides have not been able to narrow differences over the relocation of Gunsan workers and cost-cutting," GM Korea said in a statement, referring to its workers at the Gunsan plant, which will face a closure by May.

No schedule has been set for Friday's talks, the statement said.

GM Korea is scheduled to hold a board meeting at around 8 pm on Friday to discuss filing for bankruptcy protection should it fail to reach an agreement, a source familiar with the matter said.

Even if the board approved a plan for bankruptcy protection, the company and the union could continue talks to cut labor costs before actually filing for it, the source said.

The head of Korea Development Bank, which holds a 17 percent stake in GM Korea, told Reuters this week that the state-run bank may sign a preliminary agreement by April 27 to extend financial support for GM Korea.

He said the bank may inject about 500 billion won ($471.31 million), or 17 percent of GM's pledged $2.8 billion of investments into the unit, should an interim due-diligence report on the operation turn out to be satisfactory on Friday.

(Reporting by Hyunjoo Jin and Ju-min Park; editing by Larry King)

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