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(LEAD) GM Daewoo to maintain normal operations, aims for funding in 2-3 months
By Kim Deok-hyun
SEOUL, June 2 (Yonhap) -- The South Korean unit of beleaguered General Motors Corp. will continue to operate as normal under a leaner "New GM" despite the U.S. parent's Chapter 11 bankruptcy protection filing, GM's South Korea chief said Tuesday.
Michael Grimaldi, chief executive of GM Daewoo Auto & Technology Co., added that he expects talks with South Korea's state-run Korea Development Bank (KDB) over new loans to be concluded in the coming months.
"We will continue our discussion with KDB to secure necessary funding requirements," Grimaldi told reporters in Seoul.
Grimaldi said financial assistance by KDB is "critical for us to secure a long-term credit facility and we look forward to concluding this discussion within the next 60 to 90 days."
Grimaldi emphasized that GM Daewoo's operations won't be significantly affected by the turmoil at its U.S. parent.
GM, a once-mighty American auto giant that dominated the global auto industry for much of the 20th century, filed for bankruptcy protection in New York on Monday, aiming to become a leaner, debt-free New GM.
"Along with the launch of the New GM, GM Daewoo will play an important role in the new company's global business strategy," Grimaldi said.
"We will support the launch of the New GM and our parent's accelerated drive to reinvent itself into a stronger and more competitive company," he said.
In 2002, GM bought a majority stake in the then bankrupt Daewoo Motor Co. of South Korea.
Hit by the U.S. parent's troubles and the global economic slump, GM Daewoo has also been in dire financial straits.
Since early this year, GM Daewoo and KDB have been in negotiations over the automaker's repeated call for 1 trillion won (US$812.3 million) in emergency loans.
But the state-run bank and the South Korean government have rejected the plea, saying they will help the troubled firm only if GM gives a "clear assurance on the future of GM Daewoo."
Grimaldi said GM's announcement to include GM Daewoo as part of the New GM "addressed the questions" by KDB and the South Korean government, describing talks with KDB as "very constructive."
Some analysts and union officials at GM Daewoo have expressed concern that GM Daewoo may face job cuts and other restructuring steps as GM moves to boost production of small cars in China.
GM Daewoo makes small cars and exports them under the Chevrolet brand. Exports account for nearly 90 percent of its output.
Previously, Grimaldi said GM Daewoo's cash position became critical in the current quarter as it has already exhausted a $2 billion credit line. Last year, the company posted a net loss of 875.7 billion won, hit by massive losses from currency-hedging contracts.
The currency-related losses prompted the labor union of GM Daewoo to speculate that the South Korean unit may transfer money to help its cash-strapped U.S. parent.
In the first five months of this year, GM Daewoo's sales plunged 45.4 percent from the same period last year to 222,802 units.
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