|
|
|
GM takes up 491.2 bln won rights offer by GM Daewoo
SEOUL, Oct. 23 (Yonhap) -- General Motors Co. has subscribed to the 491.2 billion won (US$412.7 million) rights offer of its South Korean affiliate GM Daewoo Auto & Technology Co., with no other shareholders joining the sale, GM Daewoo said Friday.
The decision by GM to subscribe for the entire issue is likely to ease a liquidity crisis for GM Daewoo in the short term, but a spat with South Korea's state-run Korea Development Bank (KDB) to secure fresh loans is expected to continue, analysts say.
"GM's decision to increase its equity in GM Daewoo signifies the importance of the Korean business unit to GM's global operations," said Nick Reilly, president of GM International Operations.
"GM Daewoo will continue to play a significant role in the success of the new GM's global business," Reilly said in a statement.
None of the other shareholders of GM Daewoo, including KDB, Suzuki Motor Corp. and Shanghai Automotive Industry Corp., participated in the rights offer, according to the statement.
KDB, the main creditor of GM Daewoo, is also the second-largest shareholder of the local unit of GM with a 27 percent stake.
Since February, cash-strapped GM Daewoo has been in talks with KDB to receive about 1 trillion won in new loans after exhausting a $2 billion credit line.
With little progress made at the talks, GM Daewoo said it would raise 491.2 billion won in the rights offer this month to secure working capital.
KDB, however, is demanding that GM increase the size of the rights offering, arguing the U.S. parent should raise more money for GM Daewoo.
The bank has warned that unless its demands are met it will withdraw all loans worth 1.5 trillion won from GM Daewoo.
Last week, GM Daewoo said it paid back 125.8 billion won in maturing loans to KDB on the same day.
(END)
|
| |
|
|
Home
