Seoul Plans Auction as Ford Eyes Daewoo
Ford Motor Co. said on Wednesday that it is interested in buying Daewoo Motor Co., prompting the South Korean government to solicit bids for its No. 2 auto maker rather than negotiate exclusively with General Motors Corp.
Ford will send its top Asia executive, Paul Drenkow, back to Seoul to talk with holders of Daewoo Motor’s bonds and loans in early January, a month after he began talks with the creditors. Daewoo has more than $16 billion in debt.
Ford would become the second auto maker, after South Korea’s Hyundai Motor Co. to challenge GM’s attempt to acquire Daewoo. For Ford and GM, Korea has become a pivotal target as they aim to expand sales in Asia. Analysts have said global vehicle production will double in the next 20 years, with most of the growth coming in Asia.
“Projected growth in the global auto industry is going to occur in places other than in North America and Europe, and most of that growth is going to occur in Asia,” said Jim Bright, a Ford spokesman in Detroit. “That’s why we’re looking at existing Asian manufacturers.”
For Daewoo’s creditors, selling the auto maker is a critical part of their plans to recover money from the near-insolvent industrial group, which owes at least $73 billion.
Hours after Ford’s announcement, South Korea said it planned to sell Daewoo Motor in a special auction, ending GM’s hopes of being the exclusive negotiator to buy the car maker.
“This is not a full auction,” said Sandy Park, spokeswoman for the government’s Financial Supervisory Commission. “This auction will be conducted in a manner to shorten the length of time.”
Just a week ago, the government had said it was likely to choose GM as the exclusive negotiator for Daewoo Motor--before Ford expressed its interest and Hyundai, South Korea’s top auto maker, said it wanted to buy Daewoo’s auto plant in Poland.
GM, meanwhile, confirmed that it plans to offer Daewoo’s creditors a one-third stake in the auto maker should they agree to a write-off.
Details of GM’s plans were reported by the Asian Wall Street Journal, which interviewed GM Executive Vice President Louis Hughes. GM released details “because we’re concerned there’s so much disinformation out there,” said John Mueller, a GM spokesman.
