Daewoo Chief Offers His Resignation

Kim Woo Choong offered to step down as chairman of near-insolvent Daewoo Group, ending 32 years at the helm of a business that he built into a $66-billion empire with borrowed money.

The presidents of 12 key Daewoo units joined the 62-year-old Kim, who was on a trip to Germany, in offering to step down, conceding their responsibility for failing to head off South Korea’s biggest corporate failure. It was unclear whether creditors accepted the offer.

Kim started Daewoo, whose name means “Great Universe,” in 1967 with a $10,000 loan from an impressed business partner. It became the nation’s second-largest conglomerate, making everything from autos to ships and consumer electronics.

Then in July, Daewoo revealed that it owed creditors about $57 billion--more than the combined debt of the Philippines and Sri Lanka. Its reluctance to face change was personified by Kim, who decided at the height of last year’s financial crisis to buy ailing Ssangyong Motor Co. and traveled to Europe to ask banks for more money for overseas expansion.

“Kim’s failure is a classic case of a chaebol that failed to change its management style,” Kang Ho Sang, a professor at Sogang University’s Graduate School of Business, said in July. “The times, the paradigm have changed, but Kim hasn’t.”

As Daewoo’s debt woes spiraled out of control, South Korean stocks tumbled and foreign investors fled, worried that a fresh financial crisis was in the offing.

More recently, the government has stepped in to reassure investors that it won’t allow the nation’s shaky investment trust companies to go under as a result of their Daewoo exposure. Just as important, domestic creditors have made progress in plans to keep the group’s companies from collapsing.

On Monday, as Kim and his colleagues handed in their resignations, South Korea’s key Kospi index surged 5.2%, its biggest one-day gain in three months.