It was reported that General Motors of the United States has demanded that Korean creditors switch some of Daewoo Motor' debt into capital investment when it submitted letter of intent to acquire the Korean auto maker.
An official at Daewoo's creditor group said that GM had raised such a condition before starting its primary inspection of Daewoo Motor, noting that creditors sent a positive reply to GM.
Under such a proposal, for example, if Daewoo's value is estimated at 1 trillion won, GM would invest 700 billion won in cash with the remainder to be invested by the creditors. It seems that GM will stick to such a method in order to minimize its initial investment and to obtain positive evaluation from the U.S. stock market, he said. However, GM did not proposed any specific proportion of equity investment, he added.
In this connection, GM is observed to consider injecting two-thirds of Daewoo's appraisal value in cash after the ongoing inspection. In the previous inspection of Daewoo, which was conducted last June, GM reportedly estimated the Korean automaker's value at US$2 billion to US$4 billion. The new investment tactic would greatly reduce GM's burden for cash investment in Daewoo.
Meanwhile, creditors have decided to offer US$105 million of financing through the purchase of DA and letters of credit. However, some creditors have refused to accommodate it, so that financing will not be provided as planned.
An official with the creditor group said that some banks have stopped offering fresh loans as well as financial support through DA and L/C since last July. He said that it is unfair to increase the burden of some financial institutions.
Also, executives of seven creditor banks and 14 Daewoo affiliates have decided to nominate Kim Jong-Wook, managing director of Hanvit Bank, as manager of the Daewoo Motor Restructuring Committee and run it without a chairman.