General Motors will not support Korean subsidiary GM Daewoo Auto and Technology if its Korean creditor does not join the automaker’s rescue, GM’s chief finance officer Ray Young has said.
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Young told Korean reporters in Detroit that GM was unable to provide financial aid to struggling GM Daewoo and that help for the company should first come from its largest creditor Korea Development Bank.
Young’s comments directly oppose the KDB’s conditions for giving aid to GM Daewoo, the Korea Herald said. KDB on 23 April said these include GM providing support for its Korea subsidiary, plans for improving GM Daewoo’s competitiveness and guarantees for GM Daewoo’s future role within GM.
Young was also reported as saying that GM would not rule out divesting the GM Daewoo brand if neither GM nor Korean organisations help it out.
But he added that GM was willing to support any efforts by KDB to negotiate directly with US authorities concerning GM Daewoo.
“It is true that GM is currently unable to provide financial support because the company is unable to use the funds provided by the US government for its operations outside the United States,” a GM Daewoo official told the paper.
He added that Young was not stating the conditions under which GM would provide support for GM Daewoo but reiterating the situation GM was in and its inability to inject cash into its Korean subsidiary without authorisation from the U.S. government.
KDB is maintaining its original position.
“There are no changes in our position and we are still reviewing the situation,” said an told the Korea Herald.
GM Daewoo also faces having to pay back forward exchange contracts worth about US$890m in May and June, the report said.
Although the KDB is working with concerned banks to give the carmaker an extension on about $450m of the contract, one or two of the banks are said to be undecided on the issue.
