By Jane Han
Staff Reporter
BUPYEONG, Incheon ― General Motors CEO Fritz Henderson said Thursday that the U.S. carmaker has been given approval by the board of directors to join its cash-strapped local affiliate's new rights offer, but failed to provide detailed figures and come up with additional solutions to keep the company's crucial hub in Asia afloat.
The chief executive, visiting South Korea for the first time since GM got out of bankruptcy last summer, met with reporters a day after having talks with the state-run Korea Development Bank (KDB) ― GM Daewoo's main creditor ― on the struggling carmaker's future.
GM Daewoo is seeking a 1-trillion-won ($855 million) loan after using up a $2-billion credit line.
"We had a constructive and open dialogue with KDB," said Henderson at a GM Daewoo plant on the outskirts of Seoul. He declined to elaborate on the details.
Last week, KDB said that it would call back maturing loans and foreign exchange contracts unless GM agreed to some of its demands, including raising more money for GM Daewoo.
GM Daewoo, the third-largest car maker in South Korea, said earlier this month that it would raise 491.2 billion won in a rights offering. Based on the plan, its U.S. parent, which owns 51 percent of the local subsidiary, would have to raise 250 billion won.
The state bank's chief Min Euoo-sung indicated that GM would have to raise more than 250 billion won. But it is unclear from Henderson's remarks whether the U.S. firm would increase the amount of its paid-in capital.
Negotiations between KDB and GM Daewoo have made little progress since they began in February due to GM's refusal to offer part of its GM Daewoo stake as collateral. KDB officials have been calling on GM to take more responsibility for "misguided" management.
Despite this, the visiting executives of the U.S. auto giant stressed their intention to keep GM Daewoo afloat.
"We, and the KDB as shareholder, have no intention of putting GM Daewoo into court receivership," said GM's Executive Vice President Nick Reilly. He said that GM has resources around the world that can be "used wisely" to invest in GM's businesses, including the operation in South Korea.
Henderson met with President Lee Myung-bak later in the day, but Cheong Wa Dae officials said the two had no discussions regarding GM Daewoo's financial condition.
Lee asked the GM chief to give more attention to the Korean affiliate, the presidential office said.
Analysts said although KDB is refusing to inject money into GM Daewoo at the moment unless its demands are met, it is likely to end up doing so because the car maker's collapse would worsen rising unemployment.
jhan@koreatimes.co.kr
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