GM bid for Daewoo Motor a week away

GM isn't keen to take on Daewoo's Bupyong plant, which was built in 1972

By CNN's Alex Frew McMillan

SEOUL, South Korea (CNN) -- General Motors is still about a week away from a final bid for Daewoo Motor.

The Detroit-based company has been negotiating for 11 months to buy bankrupt Daewoo, Korea's third-largest car company.

South Korea's finance minister, Jin Nyum, had told Daewoo's creditors and GM to wrap up their negotiations by the end of August.

If there wasn't clear progress, the government would appoint outside management, he said.

Though no final offer has been made, the talks are still progressing. A local television station reported Friday that a final deal would be ready within one to two weeks.

GM is thought to be excluding the Bupyong plant from its bid.

Hynix creditors meeting on Monday

Talks were also delayed on another corporate restructuring in South Korea.

Creditors of Hynix Semiconductor put off a restructuring meeting until Monday, from Friday. They favor a debt-equity swap to bail out the world's third-largest memory chipmaker.

But competitors such as U.S.-based Micron Technology complain the swap is tantamount to a government subsidy. The South Korean government still owns large stakes in many of its banks, including Hynix's creditors, led by Korea Exchange Bank.

Jin set the deadline for talks to conclude to sell Daewoo to GM and Hyundai Securities to a group led by American International Group, to remove uncertainty from South Korea's stock market.

He has said he will take the blame personally if the talks collapse.

His efforts to bolster stocks haven't worked. South Korean shares dropped to a one-month low on Friday, as it became clear those sales still hadn't been pinned down.

The benchmark Kospi fell 3.4 percent to 545.11. Though Daewoo Motor doesn't trade, its listed affiliate Daewoo Sales rose 2.7 percent on the prospect of a deal.

Hynix stock fell to a fresh all-time low, down 5.7 percent to 830 won. Experts wonder whether the chipmaker can survive as an independent company.

Government balking at Bupyong omission

Investors are fretting in general over the stalled efforts to attract overseas buyers. Stock in brokerage Hyundai Securities fell 10.5 percent to 7,420 won, as that deal edges to the brink of collapse.

A team led by AIG signed an agreement to buy three Hyundai companies, including Hyundai Securities, last week. But AIG and its partner, W.L. Ross & Co., now say they will walk away if Hyundai doesn't come down in price.

AIG chairman Maurice Greenberg says there may have been a miscommunication on the price. But the U.S. investors are now insisting on a 7,000 won tag.

Korean regulations prevent the sale of public stock at more than a 10 percent discount.

GM's talks also threaten to unravel, but over the Bupyong plant. It was a hotbed of labor unrest after Daewoo laid off workers there in February. It is also Daewoo's oldest, built in 1972.

Korean labor unions have promised to make life difficult for GM if it doesn't take on Bupyong. They say they will make it impossible for the company to sell cars in South Korea.

But analysts say GM is keener on getting manufacturing facilities near the booming Chinese market than on selling cars in Korea itself.

GM is likely to get a fire-sale price if it inks a deal, experts say. Earlier efforts to sell Daewoo to Ford Motor fell apart.

But the government is balking at GM's demand for tax incentives, as well as leaving out the Bupyong factory, according to local media.

Daewoo Motor slumped into receivership last November, unable to support its now-$17 billion debt load.

Companies like Daewoo collapsed under huge debt loads in the aftermath of the 1997 crisis, when Asian currencies collapsed against the dollar, making it very difficult to pay back dollar debts.

The Korean government has since spent $110 billion helping its banks and companies rebuild after the Asian financial crisis.

But South Korea's economy is holding up better than most in Asia in the current slowdown. Analysts credit its restructuring efforts.

South Korea also paid back the last of its bailout loans to the International Monetary Fund on August 23.