Daewoo will be an ex-conglomerate

17 August 1999

The fatigued Daewoo group, ridden with debt and facing dismemberment, will soon have to be content with being just a car company. The creditors initiating the financial restructuring of the group have finalised a plan that ensures dismantling Korea''s second largest industrial group virtually into a six-unit car business.

The restructuring plan cleared by the creditors will be implemented by 1999-end to enable the group to attain a debt-to-equity ratio of 196 per cent against the 527 per cent it had in end-1998.

The six units of the current 22 to be retained by the group are: the unlisted Daewoo Motor, Daewoo Motor Sales, the trading division of Daewoo Corporation, the car-related business of Daewoo Telecom, the machinery division of Daewoo Heavy Industries and the unlisted Daewoo Capital.

The plan may ultimately lead to Daewoo holding just Daewoo Corporation. The reason: Daewoo Motor, which runs the core of the group''s car business, may go to General Motors.

Creditors said the remaining businesses and affiliates will be spun off or sold. The creditors plan to take over the profit-making brokerage firm Daweoo Securities, which is South Korea''s largest brokerage unit, and then sell it.

Meanwhile a US investment firm has agreed to buy some assets and operations of group company Daewoo Electronics at an estimated $3.2 billion. Announcing that Walid Alomar & Associates of the US has signed a preliminary agreement for acquisition of the assets and operations, president of Daewoo Electronics Yang Jae-yeol said the group''s creditors and shareholders will have to approve the deal before it can be implemented.