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GM, Creditors to Start Formal Talks to Buy Daewoo Motor
General Motors Corp. has agreed to start formal talks with creditor banks of Daewoo Motor Co. to buy the ailing Korean automaker, the U.S. automaker announced yesterday.
General Motors is expected to make an official proposal to buy the ailing Daewoo Motor Co. as early as today, an official at the creditors group said.
He also expected that the negotiation teams from the U.S. carmaker, Daewoo and its creditors will start sales discussions either Saturday or next Monday.
``The talks will take place in an unspecified foreign country,'' he also added.
The GM side is likely to lay down its acquisition price and the scope of Daewoo operations to be taken over and the core elements of its bid.
The U.S. auto giant will first outline the scope of the bid and adjust the bidding price while conducting negotiations with the creditors, the official said.
A GM delegation led by Alan Perriton, responsible for GM's mergers and acquisitions in the Asia-Pacific region, arrived in Seoul Monday and met with creditors and government officials.
GM's latest move follows its submission of a letter of intent to acquire the Korean automaker last October to the creditors.
GM formed a consortium with Fiat of Italy to take over Daewoo Motor after Ford Motor Co. abruptly pulled out of a deal worth 6.9 billion dollars last September.
The creditors hope that GM will buy up Daewoo's entire production units in Pupyong, Kunsan and Changwon but it remains to be seen whether GM will include the run-down Pupyong plant in its shopping list.
To help speed up the auction, the state-funded Korea Development Bank, a main creditor of Daewoo, suggested last week that creditors could turn loans into equity stakes.
The debt for equity swap has been a key demand from GM, which has expressed concern about Daewoo Motor's huge debts.
Since falling into crisis after its parent Daewoo Group collapsed in August 1999 under $80 billion of debt, Daewoo Motor has been kept afloat by emergency loans while creditors seek a buyer.
It had 22.3 trillion won (17.1 billion dollars) in liabilities and 9.1 trillion won (7.0 billion dollars) in assets at the end of last year.
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