The Commencement of GM-Daewoo Motors Delays

GM-Daewoo Motors planned to commence in the early of September looks to be postponed to the end of September or early of October.

He postponement is due to internal dispute among creditors (financial institutions) on liquidation that is a prerequisite for the commencement of GM-Daewoo Motors.

▽ The postponement of the commencement= according to the creditors and GM-Daewoo Motors, The creditor haven’t yet decided the each portion of investment of 197 million dollars (= 236 billion won) on new company GM-Daewoo Motors.

To make thin worse is that the both parties have big different point of view on new loan. The creditors promised to loan 1.25 billion dollars (1.5 trillion won) at market interest rate, 750 million dollars (900 billion won) at fixed rate of 6% and so on. Total amount of 2 billion dollars was promised.

However, the commercial banks are reluctant to lend new loan partly because the fixed rate of 6% is too low and partly because the prospect of the new company is not optimistic.

Other issues such as the allocation of preferential shores (12 billion dollars) of GM-Daewoo Motors rewarded for sales, the priority between banks and Korea Asset Management Corporation (KAMCO). The banks supported GM-Daewoo Motors by issuing public bonds, and KAMCO has priority on liquidation mortgage.

First, the creditors have a plan to agree compromise within one or two weeks not to th4e commencement of GM-Daewoo Motors. However, the liquidation plan has to be submitted to the court to be approved. It is 2 or 3 weeks procedure. So it is impossible for GM-Daewoo Motors to commence in the early of September.

Kim Jung-soo, the Vice President of GM-Daewoo Motors says, “we are trying our best to commence in the early of September.”

▽ Busy GM-Daewoo Motors= The commencement of GM-Daewoo Motors is prepared smoothly.

In last June, the company committed a branding company and an advertising company for a new GI image and logo and performed precision interview for 1,500 customers in July for market portion considering 5 domestic automotive manufacturers.

The company prepares to show successive model J-200 of Nubira in Paris Motors Show beginning at 28th of September.

Kim Jong-do, a senior manager talks “J-200 is the first car GM-Daewoo Motors shows in the world and it will be introduced domestically in the middle of October.”

The company structure has been established almost.

GM has sent managers for each part to Korea and the management that has been in Daewoo will be appointed soon. For new staffs, westernized and simplified remuneration and promotion system will be applied.

Kim, the Vice President says, “Even if the company suffers difficulties, one it commences, it will be settled soon on normal orbit.”

Ho-Won Choi bestiger@donga.com