GM Daewoo to operate as normal under New GM

By Kim Deok-hyun
SEOUL, June 2 (Yonhap) -- The South Korean unit of General Motors Corp. will
continue to operate as normal under a revamped New GM after the U.S. parent
proceeds with its Chapter 11 bankruptcy protection, the top executive of GM
Daewoo Auto & Technology said Tuesday.

GM, a once-mighty American auto giant that dominated the global auto industry for
much of the 20th century, filed for bankruptcy protection in New York on Monday,
aiming to become a leaner, debt-free New GM.
GM Daewoo Chief Executive Officer Michael Grimaldi said the company's operations,
including GM's new global mini and small car programs based in South Korea, are
continuing as planned.
"Along with the launch of the New GM, GM Daewoo will play an important role in
the new company's global business strategy," Grimaldi said in a statement.
"We will support the launch of the New GM and our parent's accelerated drive to
reinvent itself into a stronger and more competitive company," he said.
In 2002, GM bought a majority stake in the then bankrupt Daewoo Motor Co. of
South Korea.
Hit by the U.S. parent's troubles and the global economic slump, GM Daewoo has
also been in dire financial straits.
Since early this year, GM Daewoo and state-run Korea Development Bank have been
in negotiations over the automaker's repeated call for 1 trillion won (US$812.3
million) in emergency loans.
But the state-run bank and the South Korean government have rejected the plea,
saying they will help the troubled firm only if GM gives a "clear assurance on
the future of GM Daewoo."
Some analysts and union officials at GM Daewoo have expressed concern that GM
Daewoo may face job cuts and other restructuring steps as GM moves to boost
production of small cars in China.
GM Daewoo makes small cars and exports them under the Chevrolet brand. Exports
account for nearly 90 percent of GM Daewoo's output.
Previously, Grimaldi said GM Daewoo's cash position became critical in the
current quarter as it has already exhausted a $2 billion credit line. Last year,
the company posted a net loss of 875.7 billion won, hit by massive losses from
currency-hedging contracts.
The currency-related losses prompted the labor union of GM Daewoo to speculate
that the South Korean unit may transfer money to help its cash-strapped U.S.
parent.
In the first five months of this year, GM Daewoo's sales plunged 45.4 percent
from the same period last year to 222,802 units.
(END)