GM Nears Deal to Buy Daewoo Motor

The main creditor bank of Daewoo Motor Co. said Tuesday it may wrap up a deal to sell the bankrupt South Korean carmaker to General Motors Corp. this week. 

``There is a possibility of reaching an agreement by the end of this week,'' said Kim Young-chan, a spokesman for state-run Korea Development Bank, which had led negotiations with GM. 

Kim gave no further details. 

Quoting an unidentified government official, South Korea's Yonhap news agency reported Tuesday that the GM-Daewoo deal will be announced Friday. 

On Monday, Rob Leggat, director of GM's corporate communications in Asia, said his company is ``very optimistic'' that a memorandum of understanding can be signed ``in the near future.'' 

The GM official, however, had dismissed as ``speculative'' a report by South Korea's JoongAng Ilbo newspaper on Monday that a deal could be announced as early as Friday. 

The Yonhap news agency said Tuesday that GM will pay about $1 billion for Daewoo's overseas units, two of three local plants and the after-service operation. 

The U.S. auto giant will not take over Daewoo's main plant in Bupyong, 18 miles west of Seoul, which experts say is inefficient, the news agency said, but it will buy all cars made at the plant for up to six years. 

Meanwhile, Daewoo Motor was forced to shut down the main plant and another plant in Kunsan, 112.5 miles south of Seoul, on Tuesday due to lack of parts. The plants have a combined annual capacity of 800,000 vehicles. 

Some 20 subcontractors called a one-day boycott of parts supplies, demanding full payment of $654 million the carmaker owes them, said Kim Sung-soo, a Daewoo spokesman. 

Daewoo Motor, which is under court receivership after filing for bankruptcy in November with an estimated debt of $17 billion, doesn't have enough money to pay its suppliers. 

Court receivership allows a bankrupt company to continue operation by freezing debts held at the time. The suppliers, however, want Daewoo to repay those debts. 

Daewoo Motor's other plant in Changwon - with an annual capacity of 200,000 passenger cars and 30,000 commercial vehicles - remained open. 

``We expect operations to resume Wednesday, and we don't think this one-day boycott will affect negotiation with GM,'' said Kim, the Daewoo spokesman. 

Daewoo Motor can produce 2 million vehicles a year at 11 plants at home and abroad. Despite its debts, the company can help a potential investor break into South Korea's closed market and advance into China.