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GM-Fiat Take Close Look at Daewoo

10 October 2000

    Detroit - General Motors and its Italian partner Fiat are doing due 
diligence this week, taking a close look at Daewoo Motor Co.'s assets and 
debt.  Unlike the typical auditing effort where a buyer doesn't expect to 
find something, GM and Fiat expect to find some very troubling areas of 
Daewoo's finances, significant enough to have scared off Ford. The company 
reported a loss of $3.5 billion last year and is reported to have amassed 
some $80 million in debt.  If GM and Fiat do go agree to buy the troubled 
Korean automaker, look for a bargain price and perhaps an agreement to only 
buy certain portions of the business. Daewoo's creditors showed their hand 
over the weekend and stated they would be willing to allow Daewoo, once Korea's 
largest conglomerate, to be split up and sold in pieces. That's contrary to 
their position in the past and such a concession might have interested Ford. 
Watch for GM and Fiat to choose the profitable parts of the company the leave 
the unprofitable ones.

    Daewoo's largest creditors, Korean Development Bank, Hanvit Bank, Korean 
Exchange Bank, Chohung Bank, and Seoulbank met late last week to discuss 
emergency funding, but instead ended up discussing the break up of the company 
instead. Despite a cash injection of $1.9 billion from banks and creditors, the 
company is paralyzed financially. In the U.K.  Daewoo issued a statement to its 
employees at the Worthing Technical Centre that said they would "hopefully" 
receive salary checks this week. That's about two weeks late.  Daewoo is 
believed to be taking numerous suppliers down with it as well, unable to pay 
them for parts and services supplied.