GM says Daewoo Motor part of its global strategy

GM says Daewoo Motor part of its global strategy

SEOUL (Reuters): General Motors sees bankrupt Daewoo Motor as part of its global strategy and signed research pacts with South Korean universities on Monday to underscore its commitment to the local market.

GM and partner Fiat are in talks with Daewoo's creditors on buying the firm, which sold over 945,000 vehicles last year and has sprawling operations spanning 12 countries. The automaker crumbled under an interest-bearing debt burden estimated at $7.45 billion at June 30.

"Daewoo Motor is a part of General Motors' global strategy and the Korean market is very important to GM," David Jerome, managing director of GM Korea, told a news conference.

Daewoo Motor could provide the world's largest automaker with a stepping stone not only to South Korea's largely closed market, but to other parts of Asia and Eastern Europe where the company's plants are scattered.

Out of more than 900,000 vehicles sold in South Korea last year, about 340,000 of them were made by Daewoo, compared to less than 2,500 for every foreign maker combined.

GM on Monday signed pacts with several Korean universities to launch joint research projects involving recyclable manufacturing materials and electronic controls for chassis and emissions systems.

"This sort of technological cooperation shows GM's perfect commitment to Korea," he said. "We remain consistently interested in Daewoo. And GM will be a good partner for Korea in the future as in the past."

The two firms had a 15-year partnership that broke off in 1992 as the South Korean firm set out on an ambitious plan for international expansion.

Jerome did not elaborate on how takeover talks involving GM, partner Fiat and Daewoo's creditors were proceeding, citing a confidentiality agreement.

But Daewoo Motor's chairman Lee Jong-dae told Reuters on Saturday they were "steady and slow".

"I believe time is now on our side in negotiations with GM," Lee told Reuters. "I don't feel we should hurry up to conclude the sale talks."

Daewoo Motor went bankrupt last month after creditors who had rescued it and 11 other Daewoo Group firms in August 1999 cut off funds.

The jolt shut down the company's largest plant and sent suppliers scurrying, but the banks agreed to 727.9 billion won ($602.6 million) in fresh funding last week after the automaker's union agreed to job cuts.

A key issue is bringing Daewoo Motor, which has models including the Matiz minicar and Nubira and Lanos sedans, back to profitability.

Daewoo posted a net loss of 1.42 trillion won on sales of 4.66 trillion won for the first nine months of the year.