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Samsung, Renault ink deal
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April 25, 2000: 4:34 a.m. ET
Korean automaker's creditors agree to sell 70% stake for $560M
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LONDON (CNNfn) - Samsung Motors creditors agreed Tuesday to sell 70.1 percent of the South Korean automaker to France's Renault for 620 billion won ($560 million), putting the finishing touch on a deal to give Renault an additional entrée into the tough-to-penetrate Asian market.
As part of the deal, the French automaker, which last year bought a controlling minority stake in Japan's Nissan Motor for $5.4 billion, will pay about 110 billion won in cash up front, major creditor Hanvit Bank said.
Renault will then pay the creditors 233 billion won over 10 years, starting in 2004, with another 233 billion won to come from Samsung Motors, which will earmark 10 percent of its annual pre-tax earnings until the whole sum is paid.
The deal emerged from meetings last Thursday and Friday between Renault officials and representatives of the 16 creditor institutions that hold control of Samsung Motors. Those creditors, which gave their approval to the deal Tuesday, will convert the debt they hold into a 10 percent stake in Samsung. Samsung Group, the giant Korean chaebol, or conglomerate, is expected to take the remaining 19.9 percent stake.
Experts have said the purchase would make a good fit for Renault because an ultra-modern Samsung Motors plant in Pusan was built using Nissan technology. The factory closed in 1998 in the midst of financial crises across Asia.
An agreement had been widely expected, but talks ran into last-minute glitches over debt owed by Samsung Motors. Renault is not expected to export Samsung vehicles, but focus on the domestic Korean market.
Renault, which was owned by the French government until it was privatized more than four years ago, has been in the thick of merger and acquisition activity. Later Tuesday Renault is expected to strike an alliance with Swedish truck maker Volvo. 
-- from staff and wire reports
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Renault
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