Senior ruling party member vows support for GM Daewoo

INCHEON, April 19 (Yonhap) -- The floor leader of South Korea's ruling party said
Sunday that his party will make every effort to normalize the troubled business
of the South Korean unit of General Motors Corp., regardless of the fate of the
beleaguered U.S. automaker.

"If GM Daewoo is put in a difficult situation following Washington's decision on
the fate of GM in May, we will definitely strive to revive GM Daewoo through
stock purchases by the Korea Development Bank and other means," said Hong
Joon-pyo, floor leader for the Grand National Party, in a press briefing in the
Bupyeong district of Incheon, west of Seoul, where the South Korean unit has its
main plant.
The fate of GM Daewoo has become even more uncertain given its parent company
woes, with the New York Times recently reporting that the U.S. Treasury
Department has directed GM to lay the groundwork for a possible bankruptcy filing
by June 1.
Hong, making the speech in support of a candidate running in a local by-election,
explained the party will push the Korea Development Bank to buy shares in GM
Daewoo, owned by GM and its subsidiaries, in order for GM Daewoo to become an
independent corporation.
GM Daewoo Auto & Technology Co., the third-largest carmaker in South Korea, has
since February called on its main creditor Korea Development Bank to provide 1
trillion won (US$749.6 million) in financial assistance, after exhausting a $2
billion credit line.
But the state-run bank and South Korean government officials have reacted
negatively to the bailout request from GM Daewoo, citing uncertainty surrounding
the future of GM, which is teetering on the verge of bankruptcy.
Since December last year, GM Daewoo has closed or idled its three plants as
vehicle sales plunged and cash reserves dried up.
GM Daewoo posted a net loss of 875.7 billion won last year, marking its first
annual loss in four years. Sales fell 1.6 percent to 12.3 trillion won.
In the first three months of this year, GM Daewoo's vehicle sales plunged 43.8
percent from the same period last year to 135,489 units.
ygkim@yna.co.kr
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