GM buys major stake in Daewoo Motor

SEOUL, SEPT. 21. General Motors Corp. will buy bankrupt South Korean carmaker Daewoo Motor Co for just $400 million under a deal signed today that ended a long-running takeover saga.

South Korean creditors said the deal was worth $2 billion but General Motors and its partners would only make a $400 million payment to get a 67 per cent stake in a new firm to run Daewoo Motor.

Creditors will get the other 33 per cent and receive $1.2 billion worth of preferred shares in the new firm, according to a GM statement. The statement said the new firm would run only two of the three factories in South Korea and only operations in Vietnam and Egypt of the 12 overseas production facilities.

The memorandum was signed by GM and creditors, led by Korea Development Bank, at a special ceremony in Seoul today. Mr. Rudi Schlais, GM's head of Asia-Pacific operations, said ``This is a win-win. This is a very significant event."

A GM statement said the new firm would take over Daewoo Motor's plants at Changwon and Kunsan but not its main South Korean factory at Pupyong. GM had said in negotiations that Pupyong was too old and expressed fears over its militant union. The new firm would buy production from Pupyong and could buy it later, GM said.

- AFP

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Section  : Business
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