State-run Korea Development Bank (KDB) has expressed concern about the long-term survival of General Motors’ local subsidiary GM-Daewoo without more help from the US parent company.
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Bank head Min Euoo-Sung said the automaker would be in the red again this year after posting a net loss of KRW875.7bn (US$750m) last year.
KDB, the major creditor, has a 28% stake in GM Daewoo while GM holds 51%, an AFP report said.
“It can hold out for a while but I have doubts about its long-term survival,” Min reportedly told a parliamentary session.
GM Daewoo is seeking a one trillion won loan after using up a $2bn credit line.
Min said his bank could provide fresh loans if the US parent comes up with a long-term plan to make the subsidiary more competitive.
“We will do our best for GM Daewoo’s long-term survival and growth,” he said.
KDB wants a say in management, Min said, adding the subsidiary should share technology with its parent company in developing hybrid and other new cars.
AFP noted that GM Daewoo plans to raise KRW491.2bn won in a rights offering to secure working capital and that KDB is demanding GM increase the size of the rights offering, arguing that the US parent should raise more money for its subsidiary.
It also wants the US company to offer part of its stake in GM Daewoo as collateral and to let the local unit retain licences for cars that it develops itself.
