Korea GM Daewoo Says GM Not In Talks To Buy Bupyong Plant

SEOUL March 23, 2003; Dow Jones reports that GM Daewoo Automotive & Technology Co. denied Monday a local report saying General Motors Corp. , on behalf of GM Daewoo, has started talks to take over Daewoo Incheon Motor Co.

Daewoo Incheon is a plant of bankrupt Daewoo Motor Co. based in Bupyong city.

"GM or GM Daewoo hasn't opened any negotiation with Daewoo Motor's creditors on a possible acquisition (of Daewoo Incheon.) The report is not true," a GM Daewoo spokesman said.

The Seoul Economic Daily, citing an unnamed government official, said GM has begun negotiations with Daewoo Motor's creditors on the acquisition of Daewoo Incheon.

GM excluded Daewoo Incheon from its purchase of major Daewoo Motor assets last year, mostly due to the plant's outdated facilities and low productivity stemming from frequent labor strikes. However, GM said it would consider taking over the Bupyong plant within six years if productivity and management-labor relations improve during the period.

The GM Daewoo spokesman also said the report appeared to be based on the fact that Daewoo Incheon plans to expand its capacity later this year, which is just one of four conditions set by GM for a possible acquisition of the Bupyong plant.

GM Daewoo has said it plans to introduce a two-shift system at the plant in the second half of this year, potentially doubling its capacity, due to an expected increase in overseas demand for the Kalos and Magnus models.

The four conditions set by GM are: continual operation of a two-shift system at Daewoo Incheon for more than six months, above 4% on-year growth in productivity over the next few years, the number of days of operation exceeding that at GM plants, and product quality meeting GM's criteria.