SEOUL, South Korea, April 29 — General Motors concluded two years of negotiations for Daewoo Motor today, saying that it would sign an agreement on Tuesday to take over Daewoo for an initial payment of $400 million. þþA deal would give General Motors a major production foothold in Asia, home of some of the fastest-growing auto markets. More important, the success of the negotiations for Daewoo was expected to bolster the South Korean government's efforts to encourage foreign investment as it tries to revitalize the economy.þþIn another sign of the opening of the Korean economy, the creditors of Hynix Semiconductor approved by a narrow margin today a memorandum of understanding under which Micron Technology would take over its memory-chip plants in return for $2.8 billion in Micron stock. Micron would also pay $200 million for a 15 percent interest in Hynix's other plants.þþGeneral Motors said that its chairman, John F. Smith Jr., would attend a signing ceremony today along with Jung Keun Yong, governor of the government-owned Korea Development Bank, the lead creditor for Daewoo Motor, and Lee Jong Dae, the Daewoo Motor chairmen.þþThe signing will cap a process that began with efforts by Kim Woo Choong, founder of the dismantled Daewoo group, to persuade General Motors to rescue the company at the height of the Korean economic crisis four years ago. þþNext on the agenda, said Frederick Henderson, president of General Motors Asia/Pacific, would be ÿgetting the company back on its feetÿ after its slide from its position as a close competitor of Hyundai Motor to a distant third place behind Hyundai and Kia Motors. Hyundai and Kia, which has been acquired by Hyundai, together now control three-fourths of the Korean vehicle market.þþMr. Henderson said he expected the deal to close 60 to 90 days after the signing, after which General Motors would take over assets, including two modern plants in South Korea and a manufacturing plant in Vietnam. þþAs part of the deal, the new company that will be formed will issue $1.2 billion in preferred shares to creditors. þþÿWe're still debating the name of the new company,ÿ Mr. Henderson said, but G.M. was expected to preserve the Daewoo name in some fashion and also to continue to manufacture Daewoo cars in Korea.þþFor General Motors, the deal is a return to an industry it helped foster. It acquired a half-interest in a predecessor Korean carmaker in 1972. The Daewoo Group bought the other half in 1978 and bought out G.M. in 1992 for $200 million.þþA Korea Development Bank manager, Han Dae Woo, said the deal to take over Daewoo Motor was delayed by General Motors' refusal to take over overseas plantsþþThose assets, including a plant in Egypt, were acquired by Kim Woo Choong, who fled the country after his group collapsed in mid-1999 with $80 billion in liabilities, including $16 billion accumulated by Daewoo Motor. þþHynix and Micron, meanwhile, have much further to go in their courtship. Today's vote by creditors holding 77.3 percent of the loans to Hynix, just 2.3 percent more than the minimum needed for approval, came after four hours of discussions in which a small but significant minority argued that the price was too low. þþThe government has pressed the deal against the strenuous objections of small investors who would lose most of their investment while Hynix tries to resolve its debts, totaling at least $6.8 billion. þþA sign of the company's shaky position, even if the deal goes through, is that Micron has asked for a $1.5 billion loan to keep it going while Hynix is seeking fresh credit of nearly $800 million for its non- memory-chip plants.þþThe boards of Hynix and Micron still must act on the terms of the memorandum before going into a final round of negotiations similar to the talks that G.M. entered with the Korea Development Bank after completing a memorandum of understanding last December. The union at Hynix has threatened to walk out if the memorandum is approved.þþThe labor problems at Hynix resembled those at Daewoo Motor, whose union opposed the deal in sometimes bitter confrontations at the aging Daewoo plant in the Pupyong section of Inchon.þþThe union finally endorsed the takeover by General Motors after G.M. promised not to dismiss any of them and said it would seriously consider buying the Pupyong plant after using it on a contract basis he next six yearsþ
Source: NY Times
