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Daewoo Motor auction

draws global players

SEOUL: South Korea's much-touted bid to auction off the ailing Daewoo Motor Co. is sparking keen interest among global players, a top economic official said on Sunday.

"General Motors of the United States, Volkswagen of Germany, Fiat of Italy and Hyundai Motor Co. of South Korea are now interested in Daewoo Motor," Finance and Economy Minister Lee Hun-Jai told a local television talk show.

He said the government would try to sell Daewoo Motor to a bidder willing to help South Korea to maintain its current car production.

Lee's comments underlined confidence over the auction, which is to be completed by the end of June when Daewoo Motor is expected to stand on its own feet through a government-guided rehabilitation scheme.

General Motors Corp., the world's largest carmaker, has been tipped as the strongest candidate to acquire Daewoo Motor, followed by US rival Ford Motor Co..

Hyundai Motor Co., the largest local auto firm which took over debt-stricken Kia Motors Co. last year, and an association of small firms have jumped in the fray to protect their domestic concerns.

Creditor banks have said DaimlerChrysler firmed up its strategy to go for Sangyong Motor Co., the sister firm of Daewoo Motor Co. DaimlerChrysler and Sangyong had maintained technical and marketing tie-ups.

The race heated up last week with the entry of volkswagen, the world's No. 3 automaker, which expressed its intention to acquire Daewoo Motor through its investment advisor.

Creditors will accept proposals by early March. They have promised to inject fresh funds under their debt restructuring programme needed to get a more favourable offer from a potential buyer.

The scheme involves debt-equity swaps worth 1.5 trillion (1.3 billion dollars), the issue of 7.3-trillion-won convertible bonds and 900 billion won in fresh operational capital.

Along with interest rate reductions, creditors have also promised to provide 2.35 billion dollars in trade finance.

Daewoo Motor's rehabilitation is the centre piece of the government's drive to dismantle the Daewoo Group, once touted as the country's second largest conglomerate.ÑAFP