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Daewoo-GM Deal to be Signed Friday
Creditors of South Korea's Daewoo Motor and General Motors Of the U.S. are due to sign a preliminary sales agreement Friday to hand over the ailing Korean automaker to the US firm. The signing ceremony is slated to take place at state-run Korea Development Bank (KDB), the largest creditor of Daewoo Motor.
In the much-heralded US$1.2 billion acquisition deal for bankrupt Daewoo Motor, General Motor will be paying US$400 million in cash only to the Daewoo creditors, a high government official said Thursday.
Daewoo¡¯s assets to be taken over by the American firm exclude the Korean firm¡¯s oldest plant in Bupyeong and Daewoo Auto Sales, one of its affiliates. Sources close to the negotiations affirmed that the creditors and GM agreed to set up a new joint venture at US$1.8 billion in capital and, of the capital, the creditors will be receiving US$1.2 billion in preferred shares of the joint venture, while the remainder US$600 million will be shared by GM for US$400 million, equivalent to a 67 percent stake, and by the creditors for US$200 million, equivalent to a 33 percent stake.
Creditors are expected to recover their loans to Daewoo by selling off the preferred shares at the market when the joint venture is listed.
Commenting on the issue, GM said that the US$400 million equity investment will be followed by GM¡¯s additional injection of operation funds in the neighborhood of US$400 to US$500 million and, as such, GM¡¯s total investment in the deal will ultimately balloon to nearly US$1 billion.
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