(Recasts, adds analyst comments, closing shares)
By Samuel Len
SEOUL, Aug 28 (Reuters) - South Korea's third largest automaker, Daewoo Motor Co, was forced to suspend production on Wednesday as a major supplier owed part of $700 million in unpaid bills stopped deliveries of brakes and other parts.
Daewoo estimated that lost output stemming from a continued boycott by suppliers would amount to 15 billion won ($12.5 million) a day, or around 2,000 automobiles.
The supply problem 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 later this year.
"We had a limited inventory of components," Daewoo Motor spokesman Kang Sung-ki told Reuters.
"Our chairman is continuing talks with our biggest suppliers to seek their cooperation," he said.
A group representing Daewoo's 191 parts suppliers had agreed at a meeting on Monday to halt supplies from Thursday.
But Daewoo said its biggest single supplier, unlisted Delphi Automotive Systems Korea, which is not part of the group that met the carmaker on Monday, acted independently by halting supplies on Wednesday. All the suppliers are seeking around 850 billion won ($708.3 million) in back payment.
Daewoo said its parts suppliers also suspended supply last December that lasted less than a day after the automaker sought their cooperation.
RESCUE EFFORT?
An official at Daewoo's main lender, Korea Development Bank (KDB), was unable to confirm a report in the Korea Economic Daily that the state-run bank plans to offer as much as 100 billion won to the automaker's parts suppliers.
The KDB official 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 marketing arm Daewoo Motor Sales Co , which trade as a proxy for the unlisted carmaker, ended up 11 percent on Wednesday at 8,800 won on the newspaper report, unfazed by news of the suspension of production at Daewoo Motor. The main KOSPI index ended down 0.02 percent.
The stock had fallen in previous days over the carmaker's cash crunch.
Daewoo Motor Sales had also posted solid first-half results, which remained a merit for its shares, said Cho Soo-hong, an auto analyst at Dongbu Securities.
The marketing arm said earlier this month it posted a record first-half net profit, up almost 300 percent on the year to 53.2 billion won.
KDB has provided 727.9 billion won in support payments to Daewoo since the automaker entered court receivership in November 2000, another official at the bank told Reuters. Since then, Daewoo Motor has repaid KDB about half of the loans, he said.
DELAYED PAYMENTS
An official at unlisted Delphi in South Korea told Reuters it had yet to receive more than 200 billion won for parts supplied since November 2000.
"Until May, it took two weeks for cash payments for supplied parts," the official told Reuters.
"Now, payments are being delayed up to five weeks," he said, adding that the amount of orders had also declined.
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.
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, 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.
(US$1 = 1200.0 won)
(With additional reporting by Lee Shin-hyung)