GM takes larger stake in GM Daewoo

[rickaren]

GM takes larger stake in GM Daewoo

Posted Monday, Oct 26, 2009, 3:34 pm in Employee News

General Motors Co. said Friday that it had increased its holding in GM Daewoo Auto & Technology Co. of South Korea to 70.1 percent from 50.9 percent after being the only shareholder to subscribe to a rights issue this week, The Detroit News reported.

The $412 million raised in the rights issue significantly strengthens GM Daewoo’s liquidity position, GM said in a statement. The funds will go toward “general corporate purposes, including funding the repayment of maturing debt,” the paper said. GM Daewoo was facing a liquidity crunch because of the global downturn that slashed is export business, as well as currency hedging losses, the News said.

GM Daewoo’s other shareholders—the Korea Development Bank, Suzuki Motor Corp. and Shanghai Automotive Industry Corp. Group—chose not to subscribe to the equity rights issue, GM said and the paper reported. “In the absence of other shareholders exercising their rights, GM decided to subscribe for the entire issue,” the company said.

“GM’s decision to increase its equity in GM Daewoo signifies the importance of our Korean business unit to GM’s global operations,” Nick Reilly, GM executive vice president and head of GM international operations, said. (The Detroit News)