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.