SEOUL (Reuters) - South Korea this week began doing due diligence on GM Korea to decide whether to extend financial support to the loss-making operations of General Motors, after the U.S. automaker announced a restructuring of the unit and a closure of one of the plants.

Below are some key facts about GM Korea and areas that are likely to draw most scrutiny during the due diligence.

REVERSAL OF FORTUNES

GM Korea, created after GM acquired South Korean automaker Daewoo Motors in 2002, was a major manufacturing base for the Detroit car company, producing one out of five Chevy cars.

But GM's withdrawal of its Chevy brand from Europe hurt its Korean operations over the last couple of years. Production nearly halved to around 520,000 vehicles last year, from 940,000 at its peak in 2007. Slumping sales saw net losses accumulate to 1.9 trillion won ($1.79 billion) between 2014 and 2016.

GM's plant in Gunsan, which will shut down by May, took the biggest hit, with utilization rate falling to 20 percent. Among its four plants, only one is running at full capacity and the other two are running at 50 and 70 percent of their capacity.

TRANSFER PRICING Lawmakers and government officials have raised questions about GM Korea's unprofitable cost structure involving its vehicle transfer pricing plan with GM affiliates.

The cost of sales, which includes raw materials and labor costs, works out to 93.1 percent for GM Korea, higher than the 84 percent for GM's North American unit, lawmaker Ji Sang-wuk said in a report.

The cost is also highest among local peers: Ssangyong Motor is at 83.7 percent, followed by Hyundai Motor's (>> Hyundai Motor Co) 81 percent, Kia Motors' (>> Kia Motors Corporation) 80.2 percent and Renault Samsung's 80.1 percent, according to the Financial Services Commission.

GM Korea president Kaher Kazem told the parliament in October its transfer pricing is "fair and reasonable."

ROYALTY, R&D EXPENSES

In 2007, GM Korea's research expenses jumped 65 percent to 599 billion won, and they have since remained at that level, according to its regulatory filings.

Lee Ji-eun, a former attorney for Korea Development Bank, said the surge has to do with GM Korea's deal to transfer its technology license to GM headquarters under "cost share agreement."

This "led to a surge of research expenses of GM Korea, exacerbating its corporate value," she wrote in a column for a 2014 publication by the Korean Commercial Arbitration Board.

By contrast, GM Korea, which has a design and technology center, saw its technology licensing and related income shrinking - down from 249 billion won in 2009 to 36 billion won in 2016.

INTEREST EXPENSES

Since 2012, GM Korea has borrowed billions of dollars in loans from its headquarters at an annual interest of between 4.8 and 5.3 percent, higher than the rates charged by local banks.

GM Korea said its refinancing requests to Korean banks were declined and that it had to fork out a total of 500 billion won in interest payments under this arrangement with its headquarters.

GM Korea owes a total of $2.7 billion to its headquarters, which offered to swap it for equity, subject to South Korea's government funding and the union's wage concession.

($1 = 1,061.8300 won)

(Reporting Hyunjoo Jin, Additional reporting by Ju-min Park; Editing by Miyoung Kim & Shri Navaratnam)

By Hyunjoo Jin