US auto giant General Motors Corp formed a joint venture with the Korean Development Bank (KDB) that will take over four of Daewoo Motors 16 plants, including two in Korea, one in Egypt and the one in Vietnam, according to the business standard.
South Korea's bankrupt Daewoo Motor Co. posted a rising profit in September following the signing of a memorandum of understanding (MOU) between its creditors and the world's largest automaker GM last month. Daewoo returned to profit this year after pushing through with painful corporate restructuring and shedding about one third of its work force.
The deal, reached at the end of almost a year of tough bargaining, is part of GM's five-billion-dollar-a-year plan to establish an Asian foothold. Ford Motor Co. pulled out of a $6.9 billion takeover deal in September 2000.
Under the MOU, GM tentatively agreed to invest $400 million in Daewoo to take over 67 percent of its stake, while the state-run KDB, Daewoo's main creditor, plans to acquire a 33 percent stake by investing $197 million.
GM was reluctant to buy the ailing Korean Pupyong plant and has also rejected six passenger car plants in Poland, India, Romania, Ukraine, Uzbekistan and Iran, as well as commercial vehicle plants in China, the Philippines, Poland, Hungary and Czech Republic.
Daewoo Motor announced this week its third-quarter operating profit rose to 35 billion won ($27 million) from 22.7 billion in the second quarter. Its September operating profit rose to 14.9 billion won from 6.7 billion won in August, marking the company's sixth consecutive month of operating profit, reported the Official Korean Information Service. Daewoo Motor sold 45,181 cars last month, with 400.2 billion won in sales, up from 352.9 billion won a month ago.
Daewoo Motor Co., South Korea's second largest automaker, has been in crisis since the collapse of the parent Daewoo Group in August 1999 with $80 billion of debt. Daewoo Motor itself met crisis last November with an estimated $17.5 billion in liabilities, and has battled since to head off bankruptcy through emergency loans.
Daewoo Motor product capacity includes 1.06 million vehicles at home and 875,000 units in overseas plants. — (Mena Report)
© 2001 Mena Report (www.menareport.com)
