GM Daewoo pays back W1.2 tri. loan to KDB

By Cathy Rose A. Garcia

GM Daewoo Auto & Technology on Wednesday announced it will repay its 1.126 trillion won loan from the Korea Development Bank, ending its row with the creditor over the issue of extending the loan’s maturity.

In a statement, GM Daewoo President and CEO Mike Arcamone said the company made the decision based on its improved financial performance.

``This action reflects GM Daewoo’s strong financial performance this year enabling us to make full payment on the outstanding facility … Full repayment of the credit facility will decrease the company’s future borrowing costs,” Arcamone said.

The 1.126 trillion won loan is under its revolving credit facility with KDB, which will be terminated this month. KDB had rolled over the loan every month since April, as the two sides negotiated for an extension of its maturity.

Since February, GM has been negotiating with KDB to receive about 1 trillion won in fresh loans for GM Daewoo after using up a $2-billion credit line.

The Korean unit of the U.S. automaker General Motors clashed with KDB over the creditor bank’s demands to have a bigger role in its long-term development.

KDB demanded GM Daewoo transfer technology-related property rights and guarantees of its future production output. The bank also wanted the right to name a chief financial officer at GM Daewoo. These demands were rejected by GM Daewoo.

GM Daewoo also reiterated the company’s intent to continue discussions on other issues raised by KDB, its second largest shareholder.

GM currently controls a 70 percent stake in GM Daewoo, while KDB has a 17 percent stake.

In the first 11 months of the year, GM Daewoo recorded total sales of 680,305 vehicles, due to strong overseas demand. Exports still account for the bulk of its sales, with vehicle exports rising 38 percent to 568,888. Its sales in Korea are also rising, but still remain limited.