GM to make Daewoo its production base in Asia

GM to make Daewoo its production base in Asia

SEOUL (AP): General Motors Corp. wants to take over South
Korea's ailing Daewoo Motor Co. as part of its global strategy to
make it a long-term small-car production base in Asia, a Seoul
official said Thursday.

Lee Hun-jai, chairman of the government Financial Supervisory
Commission, made the remarks, confirming that his office has
received GM's preliminary proposal to purchase assets of Daewoo
Motor.

"GM has requested exclusive rights (to negotiate), saying that
it will actively push to take over Daewoo Motor," Lee told
reporters after a breakfast meeting with local business leaders.

In a preliminary proposal submitted to Lee's office earlier
this week, GM reportedly expressed interest in taking over all of
Daewoo's domestic operations as well as some overseas plants in
Poland and other countries.

Lee said GM promised to retain current employment levels at
Daewoo if it takes over the firm.

Lee said Daewoo Motor's domestic creditor banks want to sell
the firm as soon as possible, because they know that a delay will
lower its selling price.

GM, Lee said, proposed taking over Daewoo Motor's all domestic
passenger car operations as well as the sport utility vehicles of
Ssangyong Motor Co., which Daewoo took over in 1998.

GM Korea officials refused to confirm or deny earlier reports
by South Korea's national news agency Yonhap that the American
firm offered US$5.4 billion to $6.4 billion for Daewoo Motor.

GM and Daewoo Motor have held talks since August on the
possible formation of a strategic alliance.

Daewoo Motor is one of 12 ailing affiliates of the Daewoo
conglomerate that are under recovery programs supervised by
domestic creditor banks.

The Daewoo group narrowly escaped going bankrupt when its
domestic creditors agreed in June to delay repayment of $8.3
billion in debt for six months and to extend $3.3 billion in new
loans.

In return, Daewoo agreed to sell or spin off 13 subsidiaries.

Its 12 other units were placed under a debt-restructuring
program that calls for creditor banks to turn debts into equity
or delay debt payment.

Daewoo Motor started as a joint venture between Daewoo Group
and GM in 1978. The partnership ended in 1992 when GM sold its 50
percent stake to Daewoo Group for $170 million.

Daewoo Motor, South Korea's second largest automaker, produced
900,000 vehicles in 1998. At the end of last year, it had $13.3
billion in total assets and $9.8 billion in debt.