Daewoo Romania braces for debt-shedding

The Korean representatives of Daewoo Automobile Romania and the officials of the Privatisation Authority have reached an agreement over the beginning of negotiations with Daewoo Motor Korea’s lenders in view of a share capital increase at Daewoo Romania in form of a debt for equity swap.
“The increase will be done by diminishing the State’s interest in Daewoo Craiova, but we will not have anything less than 35%,” government sources told Ziarul Financiar.
Daewoo Craiova’s share capital, worth $150 million is divided between Daewoo Motor  – 51% and the Privatisation Authority – 49%. Daewoo Romania’s debts amount to more than $430 million, according to the quoted sources.
Daewoo Automobile Romania spokesman Valeriu tones told Ziarul Financiar  he did not have any information about the negotiations for the time being. “I will make a comment as soon as I get the information,” tones added.
Daewoo Craiova representatives will negotiate with Daewoo Motor’s creditors over erasing part of the company’s debts, in addition to the debt for equity swap. The same sources said the start of negotiations with Daewoo Motor’s lenders was but the first step of the co-operation of the Romanian and Korean authorities for identifying solutions to clear up the situation of the Daewoo investment in Craiova. “The Koreans agreed to work with us to find an investor interested in the factory,” the quoted sources added.
The conclusion of a restructuring study conducted by Daewoo over the future of the factory in Craiova in the last few weeks will also be discussed in Seoul.  One of the problems approached in this study refers to the layoffs to be conducted at the factory in Craiova.
General Motors has recently taken over part of Daewoo Motor Korea’s assets, establishing the GM Daewoo Company, which does not include the Craiova-based company, though.
The Craiova factory has sold more than 10,000 vehicles this year, 50% more than in the same time last year.
Daewoo has invested more than $870 million in Romania so far. The company is now making Euro II compliant vehicles, with the possibility of producing Euro 3 compliant engines for Nubira II, the engine of which has already been patented.