Korean Daewoo Motor union inks key GM sale pact

SEOUL, April 18 Reuters reported that the militant union at South Korea's Daewoo Motor Co said on Thursday it had signed a pact paving the way for a sale of many of the bankrupt automaker's assets to General Motors Corp.

``It's not perfect, but unionised workers voted in support in order for a speedy recovery of Daewoo Motor's operations,'' union spokesman Choi Jong-hak told Reuters. ``The document signed today is the same as what we initially agreed to last week.''

GM, the world's largest automaker, is expected to sign a final contract next week to take over the Daewoo assets, dramatically boosting its presence in Asia's third largest economy. Daewoo sold more than 17,000 vehicles last year in South Korea and GM sold fewer than 300.

Daewoo's creditors will be able to unload some of the 16 auto plants that the 1999 collapse of the Daewoo Group left them holding.

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

Hardline unionists, fearing a sale to GM would lead to job cuts, were seeking job security and the reinstatement of laid-off workers. They also wanted a clear plan of how the U.S. automaker intended to use Daewoo's main plant, which was excluded from GM's initial list of assets it sought to acquire.

Shares of marketing arm Daewoo Motor Sales Co, which trade as a proxy for the unlisted automaker, closed up 14.6 percent at 8,100 won.

GM signed a tentative deal worth $400 million last September to buy four plants and more than 20 overseas sales affiliates.

The final acquisition price will be about the same, but GM was expected to drop plans to buy a Daewoo plant in Egypt and to scale back its takeover of sales units, the head of Daewoo's main lender, state-run Korea Development Bank (KDB), has said.

Earlier this week, 69 percent of Daewoo's 8,000 unionised workers voted to support a proposal by Daewoo's management, which last week proposed to rehire by year-end 300 of more than 1,000 workers the South Korean automaker laid off from its main plant in Pupyong last year.

Daewoo will consider merging the main plant into the new GM-Daewoo company, possibly within six years if conditions are right.

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

Creditors would be left with 13 plants in Korea, Poland, Uzbekistan and elsewhere that analysts expected to be sold or used to supply components to the revived Daewoo.