GM says major issues resolved in Daewoo Motor talks

SEOUL, April 10 Reuters is reporting that General Motors Corp said on Wednesday major obstacles had been resolved in talks to acquire South Korea's bankrupt Daewoo Motor Co, including the winning of labour support for a $400 million acquisition.

General Motors (GM), The world's biggest automaker, aims to secure a foothold in one of Asia's largest and most insular car markets by finalising an agreement to buy four of 16 plants belonging to South Korea's third-largest automaker in sales terms.

The militant union at Daewoo Motor agreed in principle on Tuesday to support a sale of core operations to GM, clearing a key obstacle to a final acquisition deal.

``We've made significant progress,'' GM spokesman Rob Leggat told Reuters.

``Most of the major issues have been resolved,'' he said. ``We expect to finalise an agreement in the near future.''

Under a collective bargaining contract Daewoo Motor signed with its union, the South Korean automaker needed union agreement for asset sales and layoffs.

``We obviously welcome any progress toward a CBA (collective bargaining contract),'' Leggat said. ``A deal could not be finalised without a collective bargaining agreement.''

On Tuesday, Daewoo Motor said in a statement it proposed to rehire by year-end 300 of more than 1,000 workers the South Korean automaker laid off from its main Pupyong plant last year. The plant was not on GM's preliminary acquisition list.

In its memorandum of understanding signed last September, GM said it was interested in buying Daewoo's Changwon and Kunsan plants in South Korea, as well as two overseas plants in Vietnam and Egypt.

Daewoo said in a statement it would maintain the existing line-up of automobiles the main plant produces, while trying its best to give the factory a role in developing new models.

Daewoo said it would consider merging the main plant into the new GM-Daewoo company possibly within six years if conditions were right. Daewoo also offered to guarantee job security at the two domestic plants GM seeks to buy.

Shares of Daewoo Motor Sales Co (04550.KS), which trade as a proxy for unlisted Daewoo Motor, were up 7.3 percent at 9,760 won at 0133 GMT on Leggat's coments, while the broader stock market index (.KS11) was down 2.19 percent.