GM should make GM Daewoo main manufacturing post of small cars: KDB

By Kim Soo-yeon
SEOUL, May 29 (Yonhap) -- South Korea's state-run Korea Development Bank (KDB)
said Friday it has called for ailing General Motors Corp. to make its Korean unit
the main production base of small cars as a precondition for the provision of
liquidity.

Cash-strapped GM Daewoo Auto & Technology Co. has asked since February for its
main creditor KDB to provide one trillion won (US$795.6 million) in financial
assistance, but the lender has been reluctant to give aid, citing uncertainty
surrounding the U.S. automaker.
GM is close to filing bankruptcy protection amid failed negotiations with its
bondholders on a debt-to-equity swap as a June 1 deadline is looming for
unveiling restructuring plans to prove its viability.
"KDB cannot provide liquidity to GM Daewoo if GM does not guarantee that it will
make GM Daewoo a main manufacturing post of hybrid and small cars," a senior KDB
official said.
KDB has a 28-percent stake in GM Daewoo, the second-largest shareholder, with the
remainder held by GM.
Analysts said the move comes as the survival of GM Daewoo will hinge on how
strongly the U.S. parent company will be committed to long-term growth for the
Korean carmaker.
Amid GM's looming bankruptcy, market watchers estimate that after restructuring,
GM Daewoo may be incorporated into a so-called new GM, along with other viable GM
affiliates.
Nick Reilly, head of GM Asia Pacific, told reporters in Seoul after talking with
KDB on Thursday that GM Daewoo would be included in a good GM even if GM files
for a bankruptcy.
KDB has said raising its stakes in GM Daewoo could be one of the options as a
condition for its financial aid to the Korean carmaker.
"We are having a discussion with KDB about future financing plan... As I said
before, we don't have any desire to sell shares to anybody," Nick said.
sooyeon@yna.co.kr
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