Several firms to vie for troubled Kia Motors

Several firms to vie for troubled Kia Motors

SEOUL (Reuters): Ford Motor Co and other foreign companies yesterday submitted letters of intent to bid for South Korea's troubled Kia Motors and its sister firm, Asia Motors Corp, a Kia spokesman said.

Ford and Korea's second largest carmaker, Daewoo Motor, submitted letters of intent yesterday, spokesman Kim Sam-sung said.

They joined South Korea's largest automaker, Hyundai Motor Co, and upstart Samsung Motors Inc, which submitted letters earlier in the week.

The spokesman said other foreign companies also had submitted letters of intent by Friday's deadline, but did not want their names disclosed.

The Korea Development Bank (KDB), Kia's main creditor, earlier said it planned to sell Kia and Asia Motors together because of their complementary relationship.

Last week KBD said the paid-in capital of the two automakers would be cut by 90 percent and then raised to 1.5 trillion won ($1.17 billion) for Kia Motors and 600 billion won for Asia Motors.

It said the ownership of Kia and Asia Motors would be given to buyers who take a minimum stake of 51 percent.

KDB said Kia's total liabilities were estimated at 8.75 trillion won at the end of March, against its total assets of 7.72 trillion won. Asia Motors had 3.07 trillion won in liabilities, compared with 1.64 trillion won of assets.

A KDB official said creditors were discussing writing off some of the debts of the two companies and that the result would be available early next week.

Domestic media reported about 4.4 trillion won of debts would be slashed.

KDB officials said a briefing would be held on July 27 for those who submitted letters of intent for the tender.

The bank said candidates would be offered opportunities to assess the management of Kia and Asia Motors after the briefing, and would be required to submit bid applications by August 21.

After a 10-day review of the proposals, the creditors would announce a winner on Sept. 1.

Kia and Asia Motors are both under court receivership after nearly collapsing last July. Creditors sought receivership for the automakers last October.

Analysts said the bidding most likely would be a battle between Ford and Hyundai.

"It will be a race between Ford and Hyundai with others trailing behind," said Ji Sung-chul, an analyst at LG Economic Research Institute.

Kia officials refused to disclose details of the bid letters, but analysts said Ford was best placed to win because of its long-time ties with Kia.