Romania will on Wednesday sign a deal to buy back shares in local car maker Daewoo Automobile from its South Korean joint venture partner which may open the way for a new sale, the economy ministry said on Tuesday.
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The Romanian government has been struggling for months to take over the 51% stake held by the bankrupt Daewoo Motor in order to find a new strategic partner for the plant, according to Reuters.
The contract will be signed by You Sik Kim, Daewoo Motor’s president and liquidator, and Ion Ion, vice president of Daewoo Automobile Romania in the presence of Economy Minister Ioan Codrut Seres, the ministry said in a statement cited by the news agency.
Last month, Seres told Reuters in an interview that a new tender was around the corner after the government reached an agreement with South Korean authorities in June.
Under the terms of the deal, Romania will pay $US51m for Daewoo Motor’s stake and $10m for debts stemming from past loans secured by the car maker. Daewoo Motor put in capital worth $156m after forming a joint venture in 1994 with Automobile Craiova, which is controlled by the Romanian government.
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By GlobalDataThe Korean firm had spent around $850m to upgrade the plant near the southwestern city of Craiova, built in the late 1970s to produce Citroen-licensed cars under the Oltcit brand.
Government sources have told Reuters that four companies had expressed an interest in taking over the plant: Ford, General Motors, Renault-Nissan and China’s Chery Automobile. The plant is aiming to produce 24,000 cars this year, mainly its best selling small Matiz model. Analysts reportedly say a new owner could increase the factory’s capacity of 100,000 vehicles per year.
Renault, which dominates the local market with the no-frills Logan brand, plans to make over 200,000 vehicles in Romania this year and around 350,000 in three years, Reuters noted.
