Korea: Daewoo Motor May Face Bankruptcy, Creditor Bank Saysgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
11/04 05:00 Daewoo Motor May Face Bankruptcy, Creditor Bank Says (Update2) By Heejin Koo
Seoul, Nov. 4 (Bloomberg) -- South Korea's Daewoo Motor Co. may face bankruptcy if its labor union doesn't agree to reform measures to hasten the sale of the nation's No. 2 automaker to General Motors Corp. and its partner Fiat SpA, Yonhap News reported, citing a creditor bank.
Daewoo Motor has 170 billion won ($150 million) in debts that mature between Nov. 6 and Nov. 15, said Uhm Rak Yong, the governor of state-run Korea Development Bank. He said creditors won't be able to extend fresh loans without an agreement from the union to cooperate in reform measures.
``(Creditors) are using their leverage to place as much pressure as on the union and get the sale process on the road,'' said Mark Barclay, an analyst at Samsung Securities Co. in Seoul.
Daewoo Motor is seeking new loans totaling 450 billion won to avoid bankruptcy. Its deteriorating finances are complicating lenders' efforts to sell the company to GM, the world's No. 1 automaker, and Fiat. Daewoo officials weren't available for comment.
``Behind the scenes, GM and Fiat will be urging creditors to reach some sort of an agreement with the labor union,'' Barclay said.
The struggling automaker put reforms on hold after its union demanded that the company pay deferred wages before discussions began on whether the union would support the restructuring plans.
The plans include laying off as many as 3,500 workers and reducing wages. As of the end of October, the company had deferred more than 100 billion won in wages, including monthly salaries and incentives.
Han Ae Taek, a Daewoo Motor labor union member, said the union hasn't changed in its stance.
``The ink has not even dried on the company's pledge that it will guarantee our jobs for the next three years,'' he said, referring to the agreement reached between the management and its workers earlier this year.
The automaker is hoping the plans will allow it to cut costs by 900 billion won next year and post a profit of 100 billion won in 2002.
-- Carl Jenkins (email@example.com), November 04, 2000