KDB sticks to guns on GM Daewoo aid

SEOUL, Oct. 20 (Yonhap) -- The Korea Development Bank (KDB) will not provide
financial support to cash-strapped GM Daewoo Auto & Technology Co. unless the
carmaker's parent presents a plan to boost its competitiveness, the bank's chief
insisted Tuesday.
The state lender has demanded General Motors Corp. take measures to hone GM
Daewoo's long-term competitive edge before seeking financial support. GM has a
controlling 51-percent stake in GM Daewoo.
"KDB will seek to push talks with GM over how GM Daewoo could beef up its
long-term competitiveness," President Min Euoo-sung said in a report to a
parliamentary audit session. "The provision of financial support will be
contingent on progress in the negotiations."
Since February, GM Daewoo has been seeking to receive about 1 trillion won
(US$856.4 million) in new loans but KDB has turned a deaf ear, insisting that GM
has not faithfully fulfilled its commitment as the biggest shareholder.
GM Chief Executive Officer Fritz Henderson visited Seoul last week to hold talks
with KDB over securing fresh loans, but the two sides failed to iron out
differences.
In September, GM Daewoo said it will raise 491.2 billion won in a share sale in
October to secure working capital, which KDB says is insufficient for the
carmaker to make a turnaround.
KDB, which owns a 27.97 percent stake in GM Daewoo, has also called on GM to
increase the size of the share offering of GM Daewoo and to let it retain
licenses for cars developed by the Korean subsidiary.
Amid the stalled progress, KDB retrieved maturing loans on Friday worth about 125
billion won from GM Daewoo and said it will not take part in the envisioned
rights offering.
sooyeon@yna.co.kr
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