Up to 1,480 people will be laid off their jobs at Daewoo-FSO Motor Polska, shareholders decided on Monday, as part of an attempt to save the troubled company from bankruptcy and open the way for an investor to help restructure it, Associated Press (AP) reported.
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AP added that shareholders also decided to issue new shares to be taken over by Korean-based Daewoo Motor to raise the Polish company’s capital to 2.25 billion zlotys ($US560 million) from 2.1 billion zlotys ($520 million).
British car maker MG Rover, which entered into negotiations to invest in the Warsaw factory last year, is still interested, Deputy Economy Minister Jacek Piechota said, according to the report.
Although the exact number of layoffs has yet to be decided through negotiations with the trade unions, Marek Dyzakowski, a trade union leader at the car factory told AP, about a thousand of the plant’s 3,100 workers showed their displeasure with the plan by picketing the economy ministry where the shareholders were meeting.
Associated Press said that, while two other Polish Daewoo operations, a car factory in the eastern city of Lublin and a light-truck plant in the city of Nysa, declared bankruptcy last year, Daewoo-FSO – the largest car plant in Warsaw and Daewoo’s largest in the country – has so far avoided insolvency.
Daewoo-FSO’s overall debt is at least 4.8 billion zlotys, AP said, adding that it lost 1.1 billion zlotys in 2001, but that was an improvement over the 2 billion-zloty deficit from 2000.
AP noted that, in February, the Polish government and creditor banks signed an agreement opening the way for British car maker MG Rover to invest in the company but financial details were not released. According to earlier plans, MG Rover was to take a 25% stake and invest $250 million in the venture, AP added.
AP said that Daewoo Motor of South Korea filed for bankruptcy in 2001 after amassing $17 billion in debt and General Motors subsequently signed a $1.2 billion deal to acquire key components of Daewoo, but the Polish factories were excluded.
AP said the Daewoo-FSO troubles come amid a slump in the Polish vehicle market and government attempts to get more Poles back to work — unemployment is currently at 17.6% — as the country prepares to join the European Union next spring.
