Banks mull rollover of GM Daewoo's currency forwards

SEOUL, April 20 (Yonhap) -- South Korean banks are considering rolling over the
maturity of currency forward contracts agreed with GM Daewoo Auto & Technology
Co. as part of efforts to ease its cash strains, sources said Monday.

GM Daewoo, the South Korean unit of beleaguered U.S. automaker General Motors
Corp., suffered about 1.5 trillion won (US$1.11 billion) in losses stemming from
currency options last year as the local currency tumbled 25.7 percent against the
U.S. dollar.
Local shipbuilders and exporters usually unload dollar forwards to hedge currency
risks in advance after winning contracts when the won is widely expected to gain
to the dollar. But the won's sharp weakness incurred snowballing losses, which
led the carmaker to post a net loss of 875.7 billion won in 2008.
According to sources, GM Daewoo had $3.7 billion in dollar forward contracts
which come to maturity between May and the end of this year. Last week, the
carmaker requested eight local banks to roll over part of about $900 million in
such contracts which matures in May and June, they added.
"The rollover of the forward contracts does not mean the supply of financial
aid," an official at a bank said. "The final decision will be come out by
Tuesday."
Cash-strapped GM Daewoo has called since February on its main creditor Korea
Development Bank to provide one trillion won in financial assistance, but the
lender has been reluctant to give aid, citing the uncertainty surrounding the
U.S. automaker.
sooyeon@yna.co.kr
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