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Foreign creditors

soften stance

on Daewoo debt

recovery

SEOUL: Foreign creditors have proposed taking more losses from their exposure to the Daewoo Group after the government halted debt buyout talks with their representatives, a news agency report said on Saturday.

The foreign creditors demanded they be allowed to retrieve 45 percent of their loans to the insolvent group instead of an earlier proposed 59 percent, Yonhap News Agency quoted a South Korean bank official as saying.

The new offer follows a meeting of Daewoo's foreign creditors in Hong Kong on Wednesday, the official said.

But the price for South Korean creditors to buy Daewoo's foreign debt appears still too high for Seoul to accept, Yonhap said.

Seoul has scrapped group talks with Daewoo Group's foreign creditors and said it would instead start separate debt buyout negotiations with the overseas bankers of each Daewoo unit.

The move would lead to the ailing group's flagship, Daewoo Corp., being put into court receivership, causing the maximum loss to foreign creditors of Daewoo Corp., South Korean financial authorities said.

The Daewoo Group is being dismantled after it collapsed in August under the weight of about 77 billion dollars in debt. Its rehabilitation has been delayed by a lack of support from foreign creditors.

After scrapping the drawn-out talks with a steering committee of the creditors, which have been focused on Daewoo Corp.'s debts, Daewoo advisors will next week start unit-by-unit talks with the other Daewoo subsidiaries.

The foreign debt talks have been locked in stalemate over a cash buyout proposal of Daewoo Group's overseas debts.

Daewoo has an estimated 9.8 billion dollars in foreign liabilities, according to a due diligence report published in November.

Seoul last month proposed to buy 36 percent of the foreign creditors' five billion dollar exposure to the group, two percent higher than the previous offer.ÑAFP