GM Daewoo to pay off nearly $1 billion in debt

[December 01, 2010]  SEOUL, South Korea (AP) -- In more good news for General Motors, the company's South Korean unit said Wednesday it will repay nearly $1 billion in debt this month as its financial condition recovers.

GM Daewoo Auto & Technology Co., South Korea's fourth-largest automaker, saw its fortunes sink due to a sharp drop in sales amid the global economic slump and currency-related losses.

Things are looking better now for the company, which recovered its former position as South Korea's third-largest automaker for the month of November on the domestic popularity of its Altheon sedan.

GM Daewoo Auto & Technology Co. said in a statement Wednesday that it will pay back the 1.13 trillion won ($985 million) debt this month. The company had borrowed the money under a revolving credit facility with Korea Development Bank.

Korea Development Bank is the representative for a group of four local banks that had lent the automaker money, according to Park Hae-ho, a GM Daewoo spokesman.

"This action reflects GM Daewoo's strong financial performance this year enabling us to make full payment" on the debt, GM Daewoo CEO Mike Arcamone said in a statement.

The debt will be repaid by Dec. 8, said Lim Young-mi, a GM Daewoo spokeswoman.

Unlisted GM Daewoo, which releases financial information once a year, did not elaborate. The company has seen sales rise this year following last year's slump in the wake of the global financial crisis and economic slump.

Domestic and international sales during the first 11 months of this year totaled 680,305 vehicles, 33 percent higher than the same period last year, said Lim. Sales had slumped in 2009 to 578,758 vehicles from 881,960 in 2008.

The figures exclude so-called complete knockdown kits -- or parts that are exported for assembly overseas.

General Motors Co. owns a 70.1 percent stake in GM Daewoo. Korea Development Bank is the second-largest shareholder with a 17-percent stake, Park said.

GM Daewoo was created after Detroit-based GM in 2002 acquired Daewoo Motor Co., the automobile unit of the Daewoo Group. That conglomerate had collapsed as a result of the financial implosion that hit South Korea in 1997-98, part of the broader Asian economic crisis.

General Motors filed for bankruptcy protection last year and was rescued with a $50 billion infusion from U.S. taxpayers. The company became publicly traded again last month with an initial public offering.

[Associated Press]

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