Samsung swaps car unit for Daewoo firm<\/p>\n
SEOUL (Reuters): South Korea's Samsung will swap its troubled
\ncar business for the debt-burdened electronics company of its
\nrival Daewoo as the country's bloated conglomerates on Monday
\nannounced moves to shed scores of their units.<\/p>\n
Seeking to kick start its sputtering corporate restructuring
\ncampaign, the government also said the family-run conglomerates
\nknown as chaebol plan to raise 70 trillion won ($58 billion)
\nthrough foreign investments, capital increases and asset sales.<\/p>\n
With the public mostly blaming the chaebol for their economic
\nmisery and foreign investors skeptical about the pace of
\ncorporate reform, President Kim Dae-jung called the heads of the
\ntop five groups to the Blue House for some presidential
\njawboning.<\/p>\n
The only concrete deal to emerge so far is Samsung Group
\nagreeing \"in principle\" to selling its infant car business to
\nDaewoo Group in exchange for unlisted Daewoo Electronics.<\/p>\n
Samsung is the country's biggest electronics producer and the
\nworld's largest producer of memory chips. Unlisted Daewoo Motors
\nis Korea's second largest carmaker after Hyundai Motors.<\/p>\n
Daewoo Electronics had debts of 3.7 trillion won at the end of
\nJune against assets of 4.8 trillion won, while Samsung Motors'
\ndebts were 3.6 trillion against assets of 4.3 trillion won,
\nanalysts said.<\/p>\n
Analysts said the fate of Samsung Motors was sealed when it
\nfailed to take over Kia Motors and Asia Motors Hyundai Group won
\nan auction for the two insolvent car companies in October.<\/p>\n
The Financial Supervisory Commission, which is in charge of
\ncorporate restructuring, said the two groups would draw up plans
\nto implement a swap of Samsung Motors for Daewoo Electronics by
\nDec. 15.<\/p>\n
\"Daewoo Group would undergo restructuring to focus on cars now
\nthat it has swapped for Samsung Motors,\" said Lee Hun-jai,
\nchairman of the financial watchdog.<\/p>\n
He told reporters the big five would reduce the total number
\nof their units to 130 from 264.<\/p>\n
Hyundai Group would focus on automobiles, construction,
\nelectronics, heavy industries, chemicals and financial services.<\/p>\n
Samsung Group would concentrate on the electronics, financial,
\ntrade and services sectors. Daewoo would focus on vehicles,
\nshipbuilding, construction, trade and financial services.<\/p>\n
Lee said the five would also seek 30 trillion won in foreign
\ncapital, 20 trillion won in capital increases and raise another
\n20 trillion won by selling parts of their businesses.<\/p>\n
The commission said the chaebol planned to clear 12.7 trillion
\nwon worth of cross debt guarantees among affiliates in different
\nbusiness sectors by the end of this year.<\/p>\n
They currently stand at 15 trillion won with total cross debt
\nguarantees among affiliates at 19.3 trillion, it said.<\/p>\n
The commission would take disciplinary action against
\nconglomerates that do not follow their restructuring pledges, Lee
\nsaid. \"If their plans are not carried out, disciplinary measures
\nsuch as cutting credit lines would take place immediately.\"<\/p>\n
\"The president will personally inspect how their plans are
\nfollowed every quarter,\" Lee said.<\/p>\n
\"This is only the beginning,\" he said. \"We will radically
\nimprove the financial structure of domestic companies which we
\nwill not be ashamed of in the international arena.\"<\/p>\n
Separately, John Dodsworth, chief representative of the
\nInternational Monetary Fund in Seoul, said too much emphasis had
\nbeen placed on the so-called big deals.<\/p>\n
\"There doesn't seem to be a big difference from their previous
\nrhetoric,\" Dodsworth said of Monday's announcements. \"But what we
\nexpect from this is that their loss-making affiliates would be
\npruned.\"<\/p>\n
South Korea had to accept a $58.35 billion rescue package from
\nthe IMF after a plunging currency and a series of corporate
\nfailures strained the banking system and pushed the country close
\nto sovereign default.<\/p>",
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