By HAE WON CHOI and ELIZABETH WILLIAMSON
Staff Reporters of THE WALL STREET JOURNAL
Daewoo Motor Co. is facing increasing problems in maintaining its
operations while its creditors negotiate the sale of the insolvent car
maker to General Motors Corp.
About 600 full-time employees at Daewoo Motor Sales Corp., an affiliate
that sells Daewoo cars in Korea, submitted resignation letters this week
to state-run Korea Development Bank, Daewoo Motor's main creditor.
An emergency planning committee representing the employees said an
additional 300 workers are expected to resign. The walkouts could
hamper Daewoo's ability to sell cars in Korea. Daewoo Motor Sales has
4,600 full-time employees.
The workers are demanding that Korea Development Bank guarantee
job security and fully disclose the details of the negotiations with
General Motors. The workers at Daewoo Motor Sales worry that
creditors will sell the company for an unfair price and allow General
Motors to cut staff. A spokesman at Korea Development Bank said it
isn't the creditors' decision to guarantee jobs and that the details of the
talks with General Motors can't be fully disclosed.
Daewoo's creditors opened talks with General Motors and its partner,
Fiat SpA, in early October to sell Daewoo Motor and related assets after
Ford Motor Co., the preferred negotiating partner selected in a June
auction, decided not to submit a final bid last month. Daewoo Motor is
part of the Daewoo Group, which creditors agreed to dismantle in
August 1999 after it amassed more than 89 trillion won ($78.9 billion) in
Meanwhile, in Poland, Daewoo plans to idle 1,200 workers beginning in
January at its truck plant in the city of Lublin. Poland's deputy finance
minister, Rafal Zagorny, said Monday that a government delegation will
fly to Seoul next month, demanding answers from one of Poland's
biggest foreign investors. Daewoo's business in Poland had been one of
the company's biggest success stories.
In Korea, Daewoo Motor also closed down a bus manufacturing line in
early October due to a lack of funds, and the company says that
without fresh financing, it will be difficult to maintain other operations.
"We need about 100 billion won every month for operations, and the
creditors haven't given a single won in operating funds," said Lee Chung
Kee, a spokesman at Daewoo Motor.
Daewoo Motor's creditors said after Ford's withdrawal that they were
willing to extend the company financing, but a spokesman at Korea
Development Bank said on Tuesday that the creditors haven't been able
to reach an agreement on how much each bank would lend.
"The banks are wary to lend money to Daewoo. They are becoming
increasingly unconvinced that they will get their money back," the
Creditors injected 1.7 trillion won into Daewoo Motor to keep it
operating between August 1999 and June 2000.
Write to Hae Won Choi at firstname.lastname@example.org and Elizabeth
Williamson at email@example.com