KDB mulls raising stake in GM Daewoo: governor

SEOUL, April 30 (Yonhap) -- The head of South Korea's state-run Korea Development
Bank (KDB) said Thursday the lender could consider increasing its stake in GM
Daewoo Auto & Technology Co. if its U.S. parent promises to provide financial
aid.
Cash-strapped GM Daewoo, the Korean unit of the beleaguered U.S. automaker
General Motors Corp., has called since February on its main creditor KDB to
provide 1 trillion won (US$775.2 million) in financial assistance, but the lender
has been reluctant to give aid, citing uncertainty surrounding the U.S.
automaker.
"We are in talks with General Motors about liquidity supply. Raising stakes in GM
Daewoo could be one of the options," KDB Chairman Min Euoo-sung told reporters,
adding that any possible liquidity supply by KDB would come only after General
Motors pledges for aid to the Korean automaker.
KDB has a 28-percent stake in the carmaker, with the remainder held by General
Motors.
On Wednesday, KDB said eight lenders decided to roll over half of US$890 million
in foreign exchange forward contracts clinched with GM Daewoo that mature in May
and June by three months.
GM Daewoo had $3.7 billion in dollar forward contracts that will mature between
May and the end of this year.
Min added that as the lenders agreed to roll over the FX forwards, liquidity
conditions facing GM Daewoo would be fine for the time being.
GM Daewoo suffered about 1.5 trillion won 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 weakness incurred snowballing losses, which led the
carmaker to post a net loss of 875.7 billion won in 2008.
sooyeon@yna.co.kr
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