SEOUL --Corp. officials are declining to comment on whether GM Chairman John F. Smith will meet privately this week with South Korea President Kim Dae-Jung to discuss GM's possible acquisition of Daewoo Motor Co. Ltd. GM has been in serious discussions on a possible take-over of the bankrupt automaker since last September. Daewoo reportedly owes creditors $16 billion.
Smith is scheduled to introduce Kim as a guest speaker at a business luncheon in Chicago on Friday, March 9. The event is being hosted by the Mid America Committee and the Chicago Council of Foreign Relations. Kim, who last year received the Nobel Peace Prize for orchestrating face-to-face reunification talks with North Korea Premier Kim Jong-II, is on a six-day U.S. tour during which he will meet with U.S. President George W. Bush and other officials and dignitaries.
But sources close to Kim tells Ward's Automotive International that a meeting with Smith is set to take place, although it is not listed on Kim's official itinerary. Those close to the situation say Kim hopes at some point to announce that he has brought the two automotive companies together and that the rescue of Daewoo by GM is at hand.
Ward's also has learned that a March 5 presentation by GM Korea officials to GM's board of directors on whether to purchase all or part of Daewoo's assets was postponed at the last minute. Sources say details of the formal proposal had not been finalized in time and may instead be presented at the board's regularly scheduled meeting in April. Whatever decision the board makes on the Daewoo purchase will be final.
Rudolph Schlais, president of GM Asia/Pacific, who spoke at the Society of Automotive Engineers annual Congress this week in Detroit, says only that GM still has an interest in Daewoo but is concerned about the automaker's current labor strife, which in some cases has resulted in violent clashes with police.
Sources say that while GM has arrived at an asset value of Daewoo, it has been forced to bide its time waiting for Daewoo's strident labor problems to subside. Daewoo, as part of a self-restructuring program, so far has cut more than 6,000 blue-collar and white-collar jobs, mostly through voluntary retirement. Of the total, 1,750 workers have been laid off.
Ward's also has learned that a team of GM information technology specialists arrived in Seoul early this month to begin a two-week due diligence on Daewoo's information technology system.
"We already know that many of Daewoo's systems are old and will cost a lot of money to replace," a GM insider says. "The team is in Korea to find out exactly what needs to be done to bring them up to par with the GM systems and specifically how much it's going to cost."
Mark Barclay, a leading Korean analyst who represents Samsung Securities, is convinced that the only reason GM would be looking at Daewoo's internal communications system is if it was ready to take the company over. Says Barclay: "They (GM) wouldn't take the trouble to make this complicated analysis unless they are planning to go ahead with the deal."
--With Barbara McClellan in Detroit