GM CEO says talks with KDB on GM Daewoo 'constructive'

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By Kim Deok-hyun
BUPYEONG, South Korea, Oct. 15 (Yonhap) -- General Motors Co. held "constructive"
talks with South Korea's state-run Korea Development Bank (KDB) on securing fresh
loans for the U.S. automaker's local unit, GM Daewoo Auto & Technology Co., GM's
Chief Executive Officer Fritz Henderson said Thursday.
"We had constructive dialogue with KDB and I think it was a great discussion
focused on the successful future of GM Daewoo," Henderson told reporters in the
city of Bupyeong, near Seoul.
"It was a very positive and open dialogue," Henderson said, declining to reveal
details of the talks with KDB.
Henderson said GM Daewoo will continue to play a key role for GM, which emerged
from bankruptcy protection in July.
"As the new General Motors focuses on building a new generation of highly
efficient cars, GM Daewoo's responsibility in manufacturing, sales and product
development for the entire GM family will grow significantly," Henderson said.
The visit by Henderson came after KDB, the main creditor of GM Daewoo, threatened
to withdraw maturing loans from the local unit of GM unless the U.S. automaker
increases the size of its rights offering for GM Daewoo.
"If GM does not accept our demand, KDB will not participate in a new share sale
and plans to retrieve maturing currency forwards or loans," KDB Chairman Min
Euoo-sung said in a statement.
Since February, cash-strapped GM Daewoo has been in talks with KDB to receive
about one trillion won (US$862.4 million) in new loans after exhausting a $2
billion credit line.
The negotiations often faltered on GM's refusal to offer part of its GM Daewoo
stake as collateral, as requested by KDB, which owns a 27.97 percent stake in GM
Daewoo.
With no major progress reported, GM Daewoo said early this month it will raise
491.2 billion won in a rights offering in October to secure working capital.
GM holds a 51 percent stake in GM Daewoo with KDB and other GM partners owning
the remainder. Still, it remains uncertain whether KDB will participate in the
new-share offering.
Hit by the financial woes of its parent and the global economic crisis, GM Daewoo
posted a net loss of some $700 million last year.
In the first eight months of this year, GM Daewoo's auto sales plunged 45.4
percent from a year ago to 344,444 units.
GM Daewoo was created in 2002 after GM acquired Daewoo Motor Co., the automobile
manufacturing unit of the collapsed Daewoo Group.
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