A WALL STREET JOURNAL News Roundup
SEOUL, South Korea -- Banks threatened to withhold loans to Daewoo
Motor Co. -- a move that could force the heavily indebted auto maker
into bankruptcy -- unless the company's labor union agrees to
Daewoo Motor must pay $155 million in debts coming due within a
week, and the company would go bankrupt without quick new loans
from the creditor banks, said Uhm Rak Yong, president of Korea
Development Bank, Daewoo Motor's main creditor.
Daewoo Motor's hardline labor union opposes restructuring demanded
by potential foreign investors, including U.S. auto maker General Motors
Corp. Under such circumstances credit banks can't provide new funds,
Mr. Uhm said.
Resistance by hardline labor is seen as a major obstacle to South
Korea's efforts to liquidate or sell debt-strapped businesses to restore
foreign investors' confidence in the economy.
About 500 workers set fire to seven trucks
during a protest rally Friday evening after credit
banks said they would liquidate or sell Samsung
Motor's truck-making plant and 51 other
"We oppose liquidation," the Samsung workers
chanted at their plant in Taegu, central South
Korea. Liquidation occurs when a company's
account is settled by apportioning assets to
The car businesses of Daewoo Motor and
Samsung have become symbols of South
Korea's reckless expansion on borrowed
Samsung sold its passenger-car operation to
Renault SA of France early this year. On Friday,
banks said that Samsung's truck-making
operation was also nonviable and must be
Daewoo Motor is now surviving on emergency funds from credit banks
trying to sell the company to a foreign investor. GM is negotiating with
Daewoo Motor's credit banks after Ford Motor Co. pulled out of a deal
to acquire Daewoo Motor in September.
If Daewoo Motor is declared bankrupt, it would further complicate
sell-off negotiations with GM, Mr. Uhm said.
There was no immediate reaction from Daewoo Motor's labor union. But
the union has threatened strikes if their company is sold to a foreign
investor. They fear such a takeover would result in massive layoffs.
Daewoo Motor has the capacity to make two million vehicles a year in
plants stretching from the Philippines to Poland. Last year, it lost $3.9
billion on revenues of $5 billion.
The nation's umbrella union groups threatened to organize strikes to
protest the government's corporate reforms.
On Friday, creditor banks released the list of 52 firms they deemed
nonviable and planned to liquidate, sell off or put under court
receivership. The 52 were selected from among 287 companies whose
future has been in question with huge amounts of debts.
On Sunday, South Korean Finance Minister Jin Nyum said Daewoo Motor
needed drastic reforms to survive.
"Daewoo Motor's reform efforts in the past year were unsatisfactory,"
Mr. Jin told a recorded talk show with state-run Korea Broadcasting
System television. "If the company fails to carry out drastic self-rescue
plans, it will not survive."
He said both management and labor should share the burden. "Without
an agreement between the two sides, the current sales talks with
General Motors could go awry," he said.