Daewoo Motor plans to put overseas plants up for separate sales
( 2001-05-31 15:11 ) (7 )

Daewoo Motor Co. chairman Lee Jong-Dae said Thursday that the insolvent South Korean company would not sell its overseas factories to General Motors Corp as part of any takeover by the US auto giant.

Lee also told ruling party lawmakers that GM, which launched a formal bid proposal on Wednesday, was not interested in Daewoo Motor's truck and bus factories.

"Our overseas factories as well as truck and bus plants (at home) are problems. We will try to put them up for separate sales," he said.

But General Motors (GM) may absorb Daewoo Motor's marketing operations abroad, he added.

Negotiations between GM and Daewoo's creditors are to begin on June 4 in an unspecified foreign country.

Lee said Daewoo Motor has a contingency plan if its deal with GM breaks down.

"If talks with GM break down, an alternative plan will be announced within one hour," he said, withouth elaborating on the plan.

GM has said the fall in Daewoo Motor's sales means the company is worth much less than in 1999 when creditors rejected a five billion dollar bid from the US company.

Some analysts say GM may offer no more than two billion dollars.

Foreign consulting firm Arthur Andersen has assessed Daewoo Motor's value at 3.6 trillion won (US$2.8 billion).

Arthur Anderson has previously advised Daewoo Motor to give up non-viable overseas operations, overhaul domestic facilities and focus on smaller cars if the deal with GM collapses.

But Daewoo Motor rejected the consulting firm's advice, saying it was now in a better position after a cost-cutting program.

It has laid off one third of its 18,000 domestic workers, triggering violent protests from unions. Its overseas businesses have been asked to be self-supporting or face liquidation.

The South Korean company made an operating profit in April of 6.7 billion won (US$5.21 million) on sales of 466.1 billion won (US$362.16 million).

Daewoo Motor has an annual production capacity of 1.05 million vehicles at home and another 875,000 in overseas plants. Its liabilities were estimated at 22.3 trillion won (US$17 billion) at the end of last year, but the company has refused to give updated figures.

The company slid into financial crisis after its parent Daewoo Group collapsed in August 1999 under US$80 billion of debt. The automaker was declared bankrupt in November last year.