GM Increases Stake in Daewoo

American manufacturer's GM stake in South Korean carmaker Daewoo increased from 51 to 70.1 percent as a result of the $412 million rights offer to which GM was the only subscriber. As a result, Korean Development Bank's (KDB) stake decreased from 28 to 17 percent. KDB refused to subscribe, as it said it is waiting for a larger rights offer, as did the other minority holders, Shanghai Automotive and Suzuki.

"The successful completion of the equity rights issue significantly strengthens GM DAT's liquidity and balance sheet position as we look to resume our strong growth," said Mike Arcamone, GM DAT CEO in a statement quoted by just-auto.com. "We are grateful for the support and confidence of our major shareholder."

"With today's news, GM has underlined its commitment to GM DAT and to Chevrolet in Europe and around the world," Wayne Brannon, Chevrolet Europe chief added. "Over the past seven years, GM DAT has become an integral part of General Motors' global engineering, design and manufacturing network."

"GM's decision to increase its equity in GM DAT signifies the importance of our Korean business unit to GM's global operations," Nick Reilly, GM International Operations concluded. "GM DAT will continue to play a significant role in the success of the new GM's global business."

On another front, GM and KDB failed to reach an understanding regarding the forecasted one trillion won financial support for Daewoo. The bank will only offer the money to GM if the Americans comes up with a long-term plan for the Korean unit.