Fresh Loans Expected to Be Injected into Daewoo Motor from Late This Week
The rescue operation of bankrupt Daewoo Motor Co. is expected to go into full swing as the labor union Monday conceded to the management plan of corporate restructuring, which requires a massive cut of jobs.
The main creditor, Korea Development Bank (KDB), and other lenders yesterday met together to discuss ways of rescuing Korea's No. 2 automaker.
As a result, the worst possible case of chain bankruptcies of Daewoo subcontractors has been avoided.
This will lead to the resumption of negotiations with the General Motors Corp. (GM) for the sale of the Korean automaker.
Reflecting the crucial consent by the labor union on the corporate restructuring, share prices of Daewoo Motor Sales rose 140 won to 1,710 won Monday.
But mountains of obstacles lie ahead till the complete settlement, as seen in the contents of the pact.
The management and the labor union Monday signed a six-point agreement which includes formation of a management reform panel and workout of a self-rescue program with required job cuts.
The other issues included in the pact are to resolve overdue pay and retirement allowances, to inject fresh loans to restore factory operation, to form a four-party consultation body from labor, management, creditors and the government and to allow special collective bargaining rights on the decisions by the management reform panel.
An official of KDB said, ``We, the creditors, will decide on a fresh loan program for both Daewoo and its subcontractors when the request is made by Daewoo.''
He said, ``The decision on fresh loans will be made according to the assessment by the capital management team dispatched by creditors, and will be immediately released upon receiving the approval of the court.''
Daewoo Motor was declared bankrupt on Nov. 8, after the labor union did not accept the layoffs proposed by the management in its 900 billion won self-rescue program Oct. 31.
Daewoo Motor filed for court receivership on Nov. 10. But judges have delayed their decision, asking for a labor-management accord on redundancies.
A district court in the western city of Inchon is to decide by Dec. 9 whether or not to allow Daewoo Motor's receivership, which is crucial to the automaker's survival. If it agrees to the application, the court will appoint an administrator to turn around the company.
In a recent meeting with creditors, Daewoo Motor asked for a total of 653 billion won in fresh loans by the end of this year. The funds break down into 115 billion won in overdue pay, 200 billion won in retirement allowance for layoffs and the remainder for factory operation. …