Negotiations for Daewoo Motor sale kick off

Negotiations kicked off Monday on the sale of Daewoo Motor in its entirety between creditors and a General Motors-Fiat consortium. However, concerns have been raised over a possible repeat of the case of Ford, which unilaterally pulled out its bid to take over the ailing automaker in the last phase, as the new negotiations also involve a sole bidder, the GM-Fiat consortium.

The Korea Development Bank (KDB), the main creditor bank of Daewoo Motor, said that the GM-Fiat consortium submitted a letter of intent (LOI) to purchase the insolvent automaker Monday and negotiations started on the takeover of assets of Daewo0 Motor¡¯s passenger car unit and related businesses.

While conducting the negotiations, the GM-Fiat consortium will carry out preliminary due diligence of Daewoo Motor and its four affiliates, Daewoo Motor Sales, Ssangyong Motor, Daewoo Capital, and the Poryong factory of Daewoo Telecom. A KDB official in charge of Daewoo Motor sales said GM expressed an intention to take over all five firms. He explained that the official negotiations will go into full swing after the two sides sign a memorandum of understanding (MOU) for the selection of the GM-Fiat consortium as the priority negotiator following the conclusion of the due diligence.

GM¡¯s preliminary due diligence is expected to take two to four weeks, but it has not been confirmed how long it will take, he said.