GM Daewoo secures $413 million from parent through rights issue

GM Daewoo Auto and Technology Co (GM Daewoo), the Korean subsidiary of US auto giant General Motors Corporation (GM) said Friday that it has arranged $413 million (491 billion Korean won) from the parent company through a rights issue to repay its debts and for other purposes.

Through the rights issue, GM's stake in GM Daewoo will increase from the present 50.9 per cent to 71 per cent.

The rights issue, which was announced in August by the cash-strapped GM subsidiary, consisted of about 162.7 million common shares of GM Daewoo at $2.54 each (3019 Korean won). Other shareholders of the company which include Korean Development Bank (KDB), Suzuki Motor Corporation and Shanghai Automotive Industry Croporation declined to subscribe to the issue.

"In the absence of other shareholders exercising their rights, GM decided to subscribe for the entire issue," the company said.

GM International Operations president Rick Reilly said: "Any further actions relating to the longer term funding structure of GM Daewoo will be considered if necessary. GM will continue to play a significant role in the success of the new GM's global business."

It is expected that the $413 million raised will reinforce GM Daewoo's liquidity position, which was badly affected by the global economic crisis and slump in exports. The funds will be used for ''general corporate purposes, including funding the repayment of maturing debt,'' the company said.