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Daewoo set to strip
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August 12, 1999: 3:53 a.m. ET
South Korean group agrees to key asset sales as creditors push restructuring
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LONDON (CNNfn) - South Korea's Daewoo Group may be left with only its core auto business as it moved closer to a restructuring deal with creditors Thursday.
Daewoo management finally dropped opposition to the sale of its brokerage business, Daewoo Securities, and said a deal to unload its electronics arm could come as early as Friday.
Daewoo is one of six sprawling industrial and financial conglomerates, or "chaebol", which dominate the Korean economy. Daewoo came close to collapse in the wake of the Asian economic crisis, saddled by the weight of 60 trillion won ($50.07 billion) in debt.
Loosening the chaebols' grip over the economy and deregulating key business sectors is seen as essential for the credibility of the government's recovery plan, allowing it to return to the international capital markets.
Daewoo was rescued from bankruptcy last month by a consortium of 69 banks which agreed to roll over some debt in exchange for wide-ranging restructuring of the company.
Daewoo is being pushed by state-controlled creditors to sell profitable concerns such as its brokerage and construction arms. The restructuring blueprint is expected to leave it with just six of its 22 current business lines.
The shrunken group would include its auto production arm and auto parts business, which last week signed a memorandum of understanding with General Motors (GM) which could see the U.S. giant assume managerial control, though GM insisted a deal "was some way off."
The plan would also leave the group with some telecom and heavy machinery assets.
-- from staff and wire reports
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Daewoo
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