GM Daewoo asks KDB to inject 1 tln won as liquidity crisis looms

SEOUL, Feb. 20 (Yonhap) -- Appeals for long-term financing by the South Korean
unit of beleaguered U.S. automaker General Motors Corp. took a more urgent tone
after it asked for hundreds of millions of dollars from a state-run bank,
according to officials at the bank and the carmaker on Friday.

The plea for aid from the Korea Development Bank (KDB) by GM Daewoo Auto &
Technology Co., which is reportedly in dire financial straits, came a week after
the South Korean government turned down a similar request made by the carmaker.
GM Daewoo, the third-largest carmaker in South Korea, has used nearly all of its
US$2 billion credit line offered by the state-run bank as part of a deal in 2002,
when GM purchased a majority stake in bankrupt Daewoo Motor, KDB officials said.
Miachel Grimaldi, the chief executive of GM Daewoo, visited KDB and sought one
trillion won (US$669 million) in financial assistance, they said.
In return, KDB asked GM Daewoo to submit its financial records and clarify GM's
stance on its South Korean unit by the end of March.
"We will decide on whether to support GM Daewoo after carefully reviewing its
self-rescue plan and the possibility of its survival with its U.S. parent," said
a high-ranking official at KDB.
Officials at GM Daewoo confirmed the visit by Grimaldi but declined to elaborate.
This week, GM said it plans to cut 47,000 jobs around the world and close five
more factories as part of its self-rescue plan in return for as much as $30
billion in financial aid from the U.S. government.
Globally, GM's units have lined up for a total of $6 billion from five foreign
governments, according to a report by the Wall Street Journal on Thursday.
It remains unclear whether KDB will offer financial aid to GM Daewoo.
Officials at the Ministry of Knowledge Economy, which oversees the automotive
industry, said the government could not provide support to GM Daewoo before GM
clarifies its stance on the South Korean unit.
GM Daewoo was created in 2002 when GM and its partners took a majority stake in
the automobile unit of the bankrupt Daewoo Group, which collapsed in 1998.
The company was once envied as one of the few profitable overseas subsidiaries
under the U.S. auto giant, but mounting woes at GM have finally caught up to GM
Daewoo.
Auto sales at GM Daewoo fell eight percent in 2008 to 881,959 units. Last month,
sales plunged 50.5 percent to 45,842 vehicles.
Domestic sales fell 20.4 percent to 6,914 units and exports plummeted 53.6
percent to 38,928 units, the company said earlier.
Hit by the steep drop in sales, GM Daewoo has halted production at its plants for
the third time since last December.
GM Daewoo is idling its No. 2 plant, which produces the Winstorm sport-utility
vehicle and Tosca sedan, in the city of Bupyeong, near Seoul, for the majority of
working days this month. Its No. 1 plant in Bupyeong, where Gentra compact models
are made, will be closed for 12 days this month.
Another plant that produces the Chevrolet Cruze in Gusan, 274 kilometers
southwest of Seoul, will be operational for only 10 days this month, according to
the company's union.
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