General Motors Corp and its partners agreed to buy Daewoo Motor Co assets for US$1.17 billion in cash and assumed debt, saying it may take years before the bankrupt South Korean automaker can be revived.
In an early taste of what General Motors may be up against, protesters wearing red headbands stormed the venue for today's signing ceremony about half an hour before the planned start. They attacked guards, shouting "General Motors leave," forcing the event's relocation to Korea Development Bank's offices.
The world's biggest automaker and its partners will invest US$400 million in cash for a 67 percent stake in a venture that will control selected Daewoo plants and sales units. Daewoo's creditors, led by the Korea Development Bank, will invest US$197 million cash for a 33 percent share.
"What we need to do is stabilize the company as we bring it up," which may take two to three years, General Motors Chairman Jack Smith said in an interview in Seoul. "That's no easy feat."
When General Motors first began talks to buy the automaker's assets in 1998, Daewoo Motor was Korea's biggest carmaker by unit sales. Now, the carmaker has just a 10th of a market dominated by Hyundai Motor Co and hasn't had a new model for two years. Unions are also yet to sign off on the accord, and disgruntled staff disrupted the planned signing ceremony in Seoul.
Union members at Daewoo Motor Sales Corp, a unit that was excluded from the purchase, "have taken over the venue for the signing," said Kim Sung-Soo, a spokesman at Daewoo Motor. ``The signing will be done at a secret place."
An official at main creditor Korea Development Bank said the signing is taking place at the bank at 3pm local time.
The US$1.2 billion price tag includes US$573 million in assumed debt, and the partners will also acquire inventories valued at US$385 million, the companies said in a release. GM wants to gain a foothold in South Korea, Asia's No. 3 auto market.
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