U.S. auto giant GM agrees to take over bankrupt Daewoo Motor
Thursday, September 20th 2001, 12:00 am
By: News On 6
SEOUL, South Korea (AP) _ General Motors Corp. agreed to acquire bankrupt Daewoo Motor Co. in a deal that will give the U.S. auto giant a stepping stone into the Asian market, company officials said Thursday.
GM and creditor banks will announce the deal Friday, said Kim Yong-soo, spokesman of the state-run Korea Development Bank, the main creditor of Daewoo Motor. The bank has been leading takeover negotiations with GM.
Lee Key-sup, a spokesman in GM's Seoul office, confirmed the plan.
Negotiators have refused to discuss details of the deal, but domestic news media report reported that GM might pay about $1 billion for Daewoo's overseas sales units, two of three local plants and the after-service operation.
President Kim Dae-jung's government has been struggling to unload Daewoo Motor, which expanded recklessly on borrowed money during the boom years of the 1980s and the early 1990s. It nearly collapsed with the onset of the 1997-1998 Asian financial crisis.
Through its banks, the government funneled billions of dollars to keep the troubled carmaker afloat. President Kim repeatedly said he was determined to find a foreign investor for Daewoo Motor, billing the sale as a potential milestone in restructuring his country's debt-ridden industries.
Daewoo Motor can produce 2 million vehicles a year at 11 plants at home and abroad. Despite its debts, the company can help a potential investor break into South Korea's closed market and advance into China, one of the key targets for future growth for American auto giants.
Creditor banks, most of them government-controlled, first looked to Ford Motor Co. But Ford abruptly pulled out of negotiations in September.
Daewoo Motor filed for bankruptcy in November with an estimated debt of $17 billion. It has since been under court receivership.
GM entered negotiations with Daewoo in June.
To sweeten a deal with GM, Daewoo Motor had to lay off one-third of its 22,000 workers.
``We are bitter and ready to fight back,'' said Choi Jong-hak, spokesman of the Daewoo Motor labor union. It planned a rally outside the Korea Development Bank headquarters on Friday.