GM makes final offer for Daewoo Motor

GM makes final offer for Daewoo Motor

SEOUL (Reuters): The world's biggest automaker General Motors
has made a final offer for Korea's bankrupt Daewoo Motor, but it
excludes the firm's largest and most antiquated plant which
employs almost half its local workforce.

"GM has submitted a final offer for Daewoo Motor, but the main
Pupyong plant has been excluded," a senior finance ministry
official said on Friday.

The future of the Pupyong plant, west of Seoul and built
almost 30 years ago, has always been a stumbling block in the
negotiations to buy Daewoo Motor as it is not only old, but
highly sensitive politically. It was the scene of fiery protests
by unionized workers after layoffs in February.

Korean officials were tightlipped in response to the GM offer
but the Korean firm's main creditor, state-run Korea Development
Bank, said talks with GM were continuing. "Both sides are trying
to narrow differences in order to wrap up talks soon."

South Korea has been keen to conclude the talks by the end of
this month. In an indication of government thinking, Finance
Minister Jin Nyum said on Friday he was willing to deal with the
public disappointment if the sale excluded the main plant.

"There can be a lot of criticism (regarding the sale of
Daewoo)," Jin said during a radio interview. "But you cannot get
anything done if you worry about criticism."

The U.S. auto giant declined to comment on Friday.

The sale of Daewoo Motor, the nation's third largest
automaker, is part of a government push to pump new blood into
Korea's ailing corporations and bolster international confidence
in the country's reforms in the wake of the Asian crisis.

Daewoo Motor is one of the country's biggest companies and the
crown jewel of the Daewoo Group, the second largest Korean
conglomerate until its collapse in 1999.

Finance Minister Jin has said he would personally take the
blame if the sale fell through or was found disappointing,
underscoring the political significance of the deal ahead of
presidential elections next year.

The finance ministry official said creditors were trying to
balance economic realities and a possible public backlash that
could result from excluding the Pupyong plant in a GM takeover.

GM and partner Fiat of Italy submitted an initial proposal in
May to acquire Daewoo, but have said little since then about the
progress of talks.

Analysts said a deal that excludes the main plant would
increase the government's burden, because of soured labor
sentiment and the difficulties of keeping the plant operating.

Since rescuing Daewoo Motor in August 1999, creditors have
provided US$2 billion in support funds to keep the automaker
running.

Another leading automaker, Ford Motor Co, made a non-binding
7.7 trillion won ($6.04 billion) offer for Daewoo Motor 11 months
ago, but the delayed sale has battered its value.

Daewoo was saddled with more than 22 trillion won in
liabilities as of end-2000, compared to 9.1 trillion won in
assets. Daewoo Motor Sales shares, which trade as a proxy for
unlisted Daewoo Motor, closed up 2.6 percent at 3,090 won, while
the broader Korea Composite Stock Price Index ended down 3.41
percent.