Major shareholders shun GM Daewoo's rights offer

SEOUL, Oct. 21 (Yonhap) -- Major shareholders of struggling GM Daewoo Auto &
Technology Co. failed Wednesday to subscribe to the company's new share issue,
overshadowing its efforts to ride out a cash crunch, sources said.

General Motors Corp., the Korea Development Bank (KDB) and other big shareholders
were invited to participate in the 491.1 billion won (US$417 million) rights
offering by late Wednesday, which was designed to secure working capital for the
cash-strapped carmaker.
According to the sources, GM, the largest shareholder of GM Daewoo with a 50.9
percent stake, had originally planned to subscribe to new shares worth 250
billion won, but opted out of the rights offer.
KDB, Suzuki Motor Corp. and Shanghai Automotive Industry Corp. didn't subscribe
for the rights offer, either, they said. The state-run KDB has a 27.9 percent
stake in GM Daewoo, while Suzuki and Shanghai Automotive Industry own 11.2
percent and 9.9 percent each, respectively.
A GM Daewoo official said existing shareholders can buy unclaimed shares on Friday.
KDB is determined not to participate in the rights offer or provide financial
support to GM Daewoo unless the U.S. parent presents a plan to boost its
competitiveness.
Since February, GM Daewoo has been seeking about 1 trillion won in new loans, but
KDB has turned a deaf ear, insisting that GM has not faithfully fulfilled its
commitment as the biggest shareholder.
"The provision of financial support will be contingent on GM's stance," KDB
President Min Euoo-sung said in a report to a parliamentary audit session
Tuesday. "GM Daewoo's long-term liquidity conditions are no so good."
GM Daewoo is widely expected to suffer a big loss this year amid flagging demand.
Last year, the carmaker's net loss amounted to 875.7 billion won, hit by a tumble
in sales and losses from currency forward trading.
(END)