Creditors of bankrupt Daewoo Motor plan to write off 77% of the company’s 19,000 billion won ($US15.8 billion) debt, removing one of the final obstacles to General Motors’ $400m investment in the company, the Financial Times (FT) said.
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The FT said that, if agreed at a meeting later this month, the write-off would be the final stage of restructuring Daewoo Motor following the collapse of its parent Daewoo Group two years ago in South Korea’s biggest corporate bankruptcy.
The FT said that General Motors is expected to launch a joint-venture including the healthiest parts of Daewoo Motor next month, after two years of fractious negotiations, with Japan’s Suzuki also agreeing to invest in the business.
A new company called GM Daewoo Auto & Technology should revitalise the tarnished Daewoo car brand and give GM a foothold in South Korea, the FT added.
The FT said that Daewoo Motor’s huge debts must be cleaned up before the new GM-led company can be launched and disputes among creditors in recent weeks had raised fears that GM’s investment could be delayed.
However, the FT said, on Wednesday it emerged that Daewoo’s largest lenders, including the state run Korea Development Bank and most of South Korea’s other largest banks, had reached tentative agreement on terms of the massive write off.
Creditors agreed to write off 14,560 billion won of loans, with the remaining 4,440 billion to be repaid by Daewoo Motor’s remaining businesses, the bus and truck divisions and the Pupyong car plant excluded from the deal with GM, the FT said.
