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Daewoo Motor receivership seen possible

SEOUL: South Korea's Daewoo Motor Co, now in the hunt for a company to buy it, could seek court receivership if a planned auction fails to produce a buyer, the head of a committee overseeing the restructuring of Daewoo firms said on Monday. "We will be able to judge whether the auction will work out by the middle of June," Oh Hogen, chairman of the Corporate Restructuring Coordination Committee (CRCC) for Daewoo companies told Reuters in an interview.

By June, the committee is expected to complete its assessment of initial proposals by bidders, he said.

"If we cannot find a suitable buyer, the next logical step will be court receivership," he added.

But Oh said he expects a successful conclusion to the auction by September given the strong interest shown by bidders.

"I don't see why the auction will fail, General Motors GM.N assured us its interest in Daewoo Motor remains high despite its equity swap with Fiat SpA FIA and others have shown the same level of commitment."

"In the beginning, GM was the most anxious candidate. But now others are also bidding very seriously and in such circumstances I believe Daewoo Motor will find a good buyer," Oh said.

He said the five candidates would submit non-binding proposals by the end of May after preliminary due diligence started this month.

"After about two weeks of assessment, we will select one or two priority candidates for negotiations," Oh said. "The candidate(s) at that stage would be given eight weeks of final due diligence and then be expected to submit binding offers by the end of August together with deposits."

Oh also said there should be no discriminatory treatment in the auction process against Korean or foreign companies.

"I don't care who buys Daewoo Motor in so far as it can help boost the on-going value of Daewoo Motor," Oh said.

He criticised public antipathy against the possible sale of Daewoo Motor to a foreign firm as short-sighted.

"The independent survival of car companies in Korea is not realistic anymore," Oh said. "In view of technical standards lagging behind major global players, Korean companies will increasingly find it difficult to survive without cooperation with foreign firms."

He said the new owner of Daewoo Motor will want to maintain Daewoo brand after the takeover because of the Korean company's successful performance overseas, such as in Poland.

But keeping the brand name is up to the buyer, he said.

"I would not mind, for example, Ford producing only Taurus sedans in Daewoo Motor plants as long as the factories are in Korea, creating revenues in Korea and hiring workers here," Oh said.

The chairman also said it is possible to sell Daewoo Motor and Ssangyong Motor separately if that method increases the value of the two companies.

"In principle, we want to sell the two carmakers in a single deal because their operations are complementary," Oh said. "But that depends on how candidates see it."

Daewoo Motor, which focuses mostly on passenger cars, had 17.91 trillion won ($16.1 billion) in liabilities against 11.84 trillion won in assets assets, according to a due diligence study published in January.

Ssangyong, which specialises in four-wheel drive sports utility vehicles, had 3.1 trillion won in liabilities versus 2.8 trillion won in assets.

Creditors put 12 core Daewoo Group affiliates under debt restructuring programmes last August, when a later study showed their liabilities exceeded their assets by almost 30 trillion won.-Reuters