Kia Auction Being Canceled as Bidders Balk at Debt

The auction of Kia Motors Corp. will be canceled, officials and analysts said Monday, after Ford Motor Co. and three South Korean auto makers bidding for the ailing company and its corporate sibling, Asia Motors Co., demanded better terms on the companies’ mountains of debt.

“The four bidders all want a write-off of debts,” a senior Kia official said. He said creditors had proposed a plan to reschedule some of the debt but had ruled out any debt write-offs in the original tender documents. He said their insistence on write-offs invalidated their bids. The winning bid was to have been announced today.

Ford and the three South Korean auto makers--Hyundai Motor Co., Daewoo Motor Co. and Samsung Motors--all bid for the two troubled auto makers in August.

Kia Motors’ total liabilities were estimated at $7.2 billion at the end of June, against total assets of $4.7 billion, according to the Korea Development Bank. Asia Motors had $2.6 billion in liabilities, compared with $1.1 billion in assets, it said.

Korea Development Bank had said before the auction that creditors would not write off any of Kia’s debt. They offered, instead, longer repayment periods and lower interest rates on some of the loans.