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General Motors `Could Give Up Korean Affiliate`

Posted April. 29, 2009 03:07,   


General Motors yesterday said it could give up GM Daewoo Auto and Technology, the Korean affiliate of the U.S. auto giant, if the Korean government fails to provide financial assistance.

GM Vice President and Chief Financial Officer Ray Young made the comment at a news conference Monday with Korean reporters at the troubled U.S. automaker’s headquarters in Detroit.

On if GM could give up GM Daewoo, he said, “It is possible.”

Young said GM is virtually operated with U.S. taxpayers` money through bailouts from the U.S. Treasury Department, and thus cannot invest money overseas.

"Since the Treasury Department agreed to provide aid only under the condition that GM stop new overseas investment, it is impossible for GM to assist overseas affiliates,” he added.

The state-run Korea Development Bank had said it could provide liquidity to GM Daewoo only if GM’s headquarters supported the Korean affiliate.

Young warned that if the Korean government does not aid GM Daewoo at a time when the U.S. headquarters cannot make overseas investment, GM Daewoo will suffer serious financial trouble.

“While GM holds a 51-percent stake in GM Daewoo, GM cannot even afford to make new investment in its Canadian headquarters, in which it holds a 100-percent stake,” he said. “GM’s overseas affiliates in Canada, Brazil and Australia have requested their respective governments and banks to extend assistance.”

Young said, however, that GM Daewoo is an important partner in the parent company’s global strategy, and plays a key role in the small car segment and engineering.

“If Korea Development Bank expresses its intent to provide assistance preemptively and holds negotiations with the U.S. Treasury Department over GM’s overseas investment, GM’s headquarters is willing to provide active support.”