General Motors has agreed in principle to pay some R8,8 billion to take over embattled Daewoo Motor. However, negotiators are still trying to make the Pupyong plant part the deal.
General Motors has agreed in principle to pay some R8,8 billion to take over embattled Daewoo Motor. However, negotiators are still trying to make the Pupyong plant part the deal.
According to Mail Business newspaper, an unidentified senior South Korean government official said GM and creditors of Daewoo Motor would sign a memorandum of understanding next week.
"I understand that major progress has been made in the negotiations between the Korea Development Bank (KDB) and GM, with the two sides reaching a tentative agreement on key points of contention," he said.
"A memorandum of understanding is expected to be signed next week, following a policy coordination meeting of economic ministers," he was quoted as saying by the economic daily.
A KDB spokesman, however, said that GM and KDB had not yet reached any agreement on key issues, including pricing.
The biggest problem has been the fate of the company’s ageing Pupyong plant at Inchon, 40 km west of Seoul. GM has rejected the factory – the company’s largest – because of its antiquated state.
According to the newspaper, GM will not buy the Pupyong plant, but act as manager of the plant. Earlier reports said GM would also help the plant sell its cars abroad through GM’s global sales outlets. The spokesman said the price for Daewoo could change, depending on the outcome of talks on the fate of the Pupyong plant.
He said a likely scenario under consideration was GM initially acquiring Daewoo’s Changwon and Kunsan plants, which are newer and produce smaller passenger cars, while considering the purchase of the Pupyong plant at a later date depending on its viability.
However, Reuters reported that negotiators were still trying to include the Pupyong plant in the deal. “The negotiating team has not given up on the inclusion of the (main) Pupyong plant in a sale,” a source close to the talks said on Tuesday.
“There have been no decisions on important matters, including a price tag and the fate of the (main) Pupyong plant,” he said.
