General Motors (GM) has agreed in principle to pay $1.1 billion to take over ailing Korean motor manufacturer Daewoo, according to a newspaper report today.
The Maeil Business Newspaperquoted a senior government official as saying GM and creditors of Daewoo Motor would sign a memorandum of understanding next week.
"I understand that a major progress has been made in the negotiations between the Korea Development Bank (KDB) and GM, wih the two sides reaching a tentative agreement on key points of contention," he said.
"A memorandum of understanding is expected to be signed next week, following a policy coordination meeting of economic ministers," he was quoted as saying.
But a KDB spokesman said GM and KDB had not yet reached any agreement on key issues, including pricing.
The biggest problem has been the fate of the company's ageing Pupyong plant at Inchon, 25 miles west of Seoul. GM has rejected the factory - the company's largest - because of its antiquated state.
According to the newspaper, GM will not buy the Pupyong plant but will act as manager of the plant. Earlier reports said GM would also help the plant sell its cars abroad through GM's global outlets.
The spokesman said the price for Daewoo could change, depending on talks on the fate of the Pupyong plant.
AFP