GM Daewoo’s share sale in trouble

GM Daewoo’s major shareholders have refused to buy the company’s new shares after General Motors failed to reach agreement with them on how to keep the ailing carmaker afloat.

GM, the state-run Korea Development Bank and other major shareholders of GM Daewoo did not file subscriptions for the company’s upcoming new share sale, according to a local financial industry representative.

GM Daewoo had hoped to raise 491.1 billion won ($424 million) to solve its cash problems. The subscription for GM Daewoo’s share sale ended yesterday.

GM has a 51 percent stake in GM Daewoo, followed by 27.9 percent by Korea Development Bank, 11.2 percent by Japan’s Suzuki Motor and 10 percent by Shanghai Automotive Industry Corp.

It was not immediately known why the shareholders refused to take part in the share sale.

Korea Development Bank, which represents other major creditor banks of GM Daewoo, has been struggling to strike a deal with GM on how to keep the cash-strapped automaker alive.

The Korean creditor banks have urged GM to share licenses on its production technologies with its Korean unit, which they said is essential for reviving GM Daewoo’s sales, but GM has not accepted the deal so far.

KDB Governor Min Euoo-sung indicated earlier this week that the state-run bank would also not be in a position to provide additional assistance to GM Daewoo at a time when GM “is not cooperating well.”

By Jung Ha-won [hawon@joongang.co.kr]