GM-Daewoo deal close, no labour pact yet-regulator

SEOUL, Jan 3 Reuters reported that Creditors of South Korea's Daewoo Motor Co are closer to a final deal to sell a large piece of the bankrupt automaker to General Motors Corp , but still need union approval, Korea's top financial regulator said on Thursday.

Analysts view the sale of the country's third largest automaker in sales terms as a litmus test of the South Korean government's willingness to restructure its debt-laden companies.

After more than a year of talks, GM, the world's largest automaker, signed a non-binding deal with Daewoo's creditors in September, saying it was interested in buying four Daewoo plants and other assets for $400 million.

But a major obstacle to a final deal has been the need for a pact ensuring support from Daewoo's militant union for the sale of the core operations at the automaker, Lee Keun-young, head of the Financial Supervisory Commission, told reporters.

``If underlying conditions are met, a conclusion would be reached soon,'' Lee said.

GM said the labour pact issue remains, but talks so far had progressed smoothly.

``Overall, we have been aggressive in talks which have been positive,'' GM Korea spokesman Kay Lee told Reuters.

``The issue that Lee Keun-young mentioned does exist. We are doing what is humanly possible for a final deal,'' Lee said.

Details on the progress of talks could emerge during the Detroit Auto Show which opens on January 6, Lee said.

The comments by the regulator led shares of marketing arm Daewoo Motor Sales Co , which trade as a proxy for unlisted Daewoo Motor, to rise 5.3 percent on Thursday, while the broader market index closed up 0.4 percent.

Daewoo's main creditor, state-run Korea Development Bank (KDB), had sought a final deal with GM at the end of last month but opposition by Daewoo's union delayed it.

Union officials want the sale contract to include job guarantees.

GM said in September's memorandum of understanding it would acquire Daewoo's Korean plants at Changwon and Kunsan as well as factories in Egypt and Vietnam.

Declared bankrupt in late 2000, Daewoo's liabilities were tallied at 22 trillion won ($16.68 billion) compared to 9.1 trillion won in assets.