GM's subsidiary raises 412 mln dlrs through rights offer

SEOUL: The struggling South Korean subsidiary of General Motors said on Friday it has secured more than 400 million dollars in new funds through a rights offering, but its US parent was the sole subscriber.

GM Daewoo said in a statement its liquidity and balance sheet position would be significantly strengthened following the 491.2 billion won (412.7 million dollar) offering.

GM subscribed for the entire issue after Korea Development Bank (KDB), which is GM Daewoo's major creditor, refused to take part. It wanted a much larger rights offer.

Shanghai Automotive Industry Corporation and Suzuki Motor Corporation, the other shareholders, also declined.

GM and state-run KDB have failed to agree in talks about a possible one trillion won in extra financial support for the South Korean unit. The bank has said it could provide fresh loans if the US parent comes up with a long-term plan to hone the subsidiary's competitive edge.

GM Daewoo, hit by falling demand amid the global downturn, has already used up a $2 billion credit line.

"GM's decision to increase its equity in GM Daewoo signifies the importance of the Korean business unit to GM's global operations," Nick Reilly, president of GM International Operations, said in the statement.

"GM Daewoo will continue to play a significant role in the success of the new GM's global business.

"Any further actions relating to the longer term funding structure of GM Daewoo will be considered if necessary," he said.

The new issue saw Gm's share of GM Daewoo rise from 51 per cent to 70.1, while KDB's fell from 28 to 17 per cent.