GM to sign main contract on Daewoo Motor Tuesday

SEOUL, April 29 Reuters reported that General Motors Corp said on Monday it would sign a final agreement to buy assets of South Korea's bankrupt Daewoo Motor on Tuesday.

The $2-billion deal should see the world's largest automaker invest about $400 million in a joint venture to take over at least three factories and some overseas outlets belonging to Daewoo, South Korea's third largest automaker in sales terms.

"Yes, the signing ceremony is scheduled to take place at 2 p.m. (0500 GMT) tomorrow," a domestic spokesman for the U.S. automaker told Reuters.

Capping off more than a year of talks, GM stands to dramatically boost its presence in one of Asia's fastest-growing car markets, where Daewoo sold more than 170,000 automobiles last year and GM sold fewer than 300.

Shares of Daewoo Motor Sales Co which trade as a proxy for unlisted Daewoo Motor were up 3.5 percent at 9,830 at 0125 GMT, while the broader stock market index <.KS11> was down 1.75 percent.

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.

Preliminary terms set last September also called for Daewoo creditors to invest about $200 million in the venture.

The new GM-Daewoo company is expected to issue lenders around $1.2 billion in preferred equity and shoulder some $300 million of debt.

Creditors will 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.

Earlier this month, the militant union at Daewoo Motor signed a pact paving the way for a sale.

In exchange, Daewoo said it would 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.