General Motors Considers a Takeover Offer for Daewoo

General Motors and Fiat consortium is considering a takeover of Daewoo’s Korean retail operations and Kunsan car plant, injecting over 2.0 billion dollars, reported Financial Times (FT) of the U. K.

FT mentioned that ``the `framework offer`-expected to form the basis of detailed negotiations with Daewoo creditors and the government in Seoul-implies a negative equity value on the carmaker`s manufacturing assets and sales network.`` But both GM and Fiat declined to comment on reports, added FT.

FT, quoting a person related with the negotiation, reported that ``the parties are looking for ways to make this work as a viable business. The framework offer will be represented only the starting point for formal talks.``

And FT quoted one adviser that ``there is very little equity value in Daewoo Motor and it requires a large amount of working capital to keep it going, even if the debts were written off.``

Furthermore, FT told that the settlement of the present negotiations is impending, considering Deputy Prime Minister and Finance and Economy Minister Jin Nyum’s remarks that ``the results were expected soon from talks with Korea Development Bank (KDB). KDB governor Jung Keun-young is taking a leading role in the negotiations.``

Meanwhile, ``terms of acquisition and price were not yet known because a bid was not received`` said an official regarding this report.

Kim Sang-Chul sckim007@donga.com