Daewoo sale set for September

GM has reportedly offered $590 million for Daewoo, excluding Bupyong, but 10 months of talks drag on

By staff and wire reports

SEOUL, South Korea -- The government will wrap up the sale of Daewoo Motor Co. by the end of September, South Korea's finance minister said Friday.

Jin Nyum also told reporters that Kim Dae-jung's administration wants to see the negotiations between American International Group and Hyundai Group concluded by then.

AIG has been in talks with Korea's second-largest conglomerate to buy Hyundai Securities, Korea's second-biggest brokerage, and two other finance units.

Jin said the government wants to see those "market uncertainties" resolved as Korea's economy weathers a tough patch.

General Motors has been in 10 months of talks to buy bankrupt Daewoo, South Korea's No. 3 carmaker.

Debt and plants at issue

The talks have dragged on as GM evaluates how much of Daewoo it wants to buy and how much of its $17 billion debt it will take on.

Some of Daewoo's factories are old and inefficient, and analysts say most of its overseas plants are in poor shape.

GM has offered close to $590 million to buy Daewoo, according to the Korea Economic Daily. But the deal excludes Daewoo's biggest Korean plant, in Bupyong.

The Bupyong plant is Daewoo's oldest, built in 1972. It has been a hotbed of labor unrest since Daewoo laid off 1,750 workers there in February.

Earlier reports stated GM offered $1 billion to $2 billion to include the plant and Daewoo Motor Sales. But GM wanted tax concessions.

Union workers have promised to make life impossible for GM to sell cars in South Korea if the Detroit-based giant doesn't buy Bupyong.

GM's talks with Daewoo's creditors, led by Korea Development Bank, continue.

Hyundai posts profit

Hyundai Motor Co. on Thursday said its mid-year profit almost doubled from a year ago, driven by strong sales. Profits were up 97 percent to $474.4 million (610.5 billion won).

Sales rose 31 percent to 11.9 trillion won.

No. 1 Hyundai and No. 2 Kia have gained market share from No. 3 Daewoo. Car buyers have expressed doubts about the quality of Daewoo's cars, particularly those made during labor disruptions.

Korean car sales dived in July, with exports dropping 13.4 percent to 150,659 and domestic sales falling 3.7 percent to 131,843, according to the country's Big Five car companies -- Hyundai, Kia, Daewoo, Ssangyong and Renault Samsung.

Investors say South Korea's stock market needs to see progress in the protracted Daewoo discussions if a recent chip-driven rally is to continue.

Reuters contributed to this report.