GM in last-ditch talks to buy Daewoo Motor

Unlisted Daewoo Motor is the world’s 15th largest automotive firm, producing 950,000 units in 1998. FSC spokeswoman Sandy Park said FSC Chairman Lee Hun-jai met with Hughes but declined to reveal details of their discussion. An official at the Corporate Restructuring Coordination Committee (CRCC) said Hughes discussed taking over Daewoo Motor with CRCC Chairman Oh Ho-gun on Tuesday morning.

Daewoo Motor was one of 12 Daewoo affiliates put under debt workout programmes in August by creditors who rescued the firms from imminent bankruptcy a month earlier.

State-run Korea Development Bank (KDB), the primary creditor for Daewoo Motor, has said the outcome of talks with GM would determine whether creditors put the carmaker up for an auction.

Daewoo Motor, the automaking arm of the troubled Daewoo Group, has liabilities of 18.6 trillion won ($ 16.5 billion), against 12.9 trillion won in assets.

KDB said US auto giant Ford Motor has expressed interest in an international auction for Daewoo Motor, which the bank floated as a possibility.

European car manufacturers Daimler Chrysler and Fiat SpA had also expressed an interest in Daewoo Motor, the German newspaper Handelsblatt reported on Monday.

It said Daimler Chrysler, which already has a three per cent stake in Daewoo commercial vehicle unit Ssangyong Motor, asked KDB for detailed information.

Daimler Chrysler declined to comment on the report, which a spokesman called speculative. Fiat also declined comment. Officials at Renault declined to comment on whether they might have an interest in Daewoo.

A sell-off plan needs the approval of Daewoo Motor’s foreign creditors, who are owed an estimated $ 1.8 billion. GM and Daewoo cooperated for 15 years before cutting ties in October 1992 over differences in strategy and investment plans.

Despite GM’s overture, creditors said they prefer to sell the Korean carmaker after the debt workout process. "If we sell Daewoo Motor now, we can’t get a good price," said a CRCC official in charge of Daewoo Motor. "We would prefer to sell it when the operation and the business of Daewoo Motor is normalised after work out support from the creditors."

KDB said a number of questions about the deal had yet to be answered including how much money GM was prepared to pay.

Detailed future plans for Daewoo Motor are scheduled to be available after the carmaker signs a debt workout programme by the end of the year. Local creditors have drafted a debt rescheduling plan calling for a temporary freeze on principal.