(Adds comments from main lender, Delphi, updates shares)
By Samuel Len
SEOUL, Aug 28 (Reuters) - South Korea's third largest automaker, Daewoo Motor Co, said on Wednesday it had halted automobile production after running out of parts following a boycott by its main supplier over back payments.
The production halt is the latest headache for the debt-laden automaker ahead of the launch of a revived Daewoo Motor under a joint venture with General Motors Corp to begin this year.
"Our largest parts supplier, Delphi Automotive Systems Korea, halted supply today," Daewoo Motor spokesman Kang Sung-ki told Reuters.
"We had a limited inventory of components," he said. "Our chairman is continuing talks with our biggest suppliers to seek their cooperation."
The firm's 191 parts suppliers, seeking around 850 billion won ($714.3 million) in back pay, had agreed at a meeting on Monday to halt supply from Thursday. But Daewoo said Delphi acted independently by halting supplies on Wednesday.
RESCUE EFFORT?
Daewoo's main lender, state-run Korea Development Bank (KDB), plans to offer as much as 100 billion won to the automaker's parts suppliers, the Korea Economic Daily reported on Wednesday.
An official at the KDB department handling loans to Daewoo told Reuters he was unable to confirm the figure and said such a decision was still under discussion.
Daewoo has said it needed creditors' approval to make payments owed to the parts suppliers, while the lenders were still in discussions over how much debt they should shoulder.
Shares of Daewoo Motor Sales Co were up 12.2 percent at 8,900 won at 0207 GMT, compared to a 0.56 percent rise in the main KOSPI index on the reports KDB would step in to alleviate the latest crisis at unlisted Daewoo Motor. The stock had fallen in previous days over the carmaker's cash cruch.
The state-run bank has provided 727.9 billion won in support payments to Daewoo since the automaker entered court receivership in November of 2000, another official at the bank told Reuters. Since then, Daewoo Motor has repaid KDB about half of the loans, he said.
An official at Delphi in South Korea told Reuters it has yet to receive more than 200 billion won for parts supplied since November of 2000.
"Until May, it took two weeks for cash payments for supplied parts," a Delphi Korea official told Reuters.
"Now, payments are being delayed up to five weeks," he said, while the amount of orders has also declined.
In April, GM, the world's largest automaker, agreed to invest $251 million and take a majority 42.1 percent stake in a joint venture with Daewoo's creditors to try and help revive the firm, while GM's business partners hold 24.9 percent.
GM has agreed to take on up to $250 million in Daewoo's debt, which could cover payments to parts suppliers after the launch of the joint venture.
Japan's top minivehicle maker Suzuki Motor Corp has said it would take a 14.9 percent stake in the GM-Daewoo joint venture, paying $89 million for the holding.
The Daewoo spokesman said the automaker had enough completed automobiles in inventory to last from one to three weeks in terms of sales. But supplies of the automaker's Rezzo minivan, sold as the Tacuma in the key U.S. market, had almost run out, the spokesman said.
"We estimate lost output would amount to 15 billion won a day, or around 2,000 automobiles," Kang said, in assessing the losses stemming from a continued boycott by suppliers.
($1=1189.8 won)
(With additional reporting by Lee Shin-hyung)