#Daewoo

An interview with Forbes the boss of the Korean Development Bank, which GM-Daewoo still owes several billion dollars, reveals that GM’s South Korean unit had a debt-to-equity ratio of 912 percent as recently as last June. GM “rescued” its crucial small-car development center by buying up all $413m of GM-Daewoo’s recent share offering, keeping the the KDB from imposing its will on the automaker. That was enough to keep the wolf from Daewoo’s door in the short term, but if Daewoo is ever going to develop a new generation of GM small cars and global products, it will have to address its $2b KDB debt and raise additional funds. For now though, GM-Daewoo is just hoping to keep a little momentum going.

News that GM is selling a control-shifting single share in GM Shanghai to its Chinese partner SAIC was the toads-from-heaven flourish at the end of an epic week for the RenCen. The day after the last of GM’s lifer CEOs left the building, Opel’s CFO followed suit. One management re-organization and a rough LA Auto Show later, came this symbolic surrender of GM’s largest market for a measly $85m. Accompanied by news that The General would buy out Suzuki’s stake in CAMI for an estimated $46.5m, no less. Oh yeah, and something about India. Freshly-minted CEO and notorious rattlesnake killer Ed Whitacre isn’t about be accused of not trying to shake things up. The only question is where will everything land?

Fresh details on GM’s Asian wranglings are coming in, and it seems that SAIC paid The General a mere $85m for the one percent needed to control the joint venture. GM’s Nick Reilly tells the New York Times:

the 51 percent stake would give S.A.I.C. the right to approve the venture’s budget, future plans and senior management. But the venture has a cooperative spirit in which S.A.I.C. has already been able to do so… S.A.I.C. wanted to have a majority stake to consolidate the venture in its financial reporting

Which is about as credible as the conclusion that the Shanghai and India deals are going to provide GM International with a meaningful amount of cash with which to rescue its European and Korean divisions. As it turns out, the Indian deal isn’t going to translate into free cash for GM. GM and SAIC will set up a joint Hong Kong-based investment company, which GM will give its Indian operations and SAIC will fund with $300-$530m, bringing its overall value to $650m.

GM CEO Fritz Henderson’s promises of independence for Opel made the right noises, but they carefully avoided any discussion of the actual role GM envisions for its German division within its global strategy. The latest updates seem to indicate that GM will keep Opel for its engineering expertise, but that the brand will be subordinate to Chevy’s global ambitions. Henderson delivers the slapdown [via Reuters]:

Opel is a regional brand and I don’t see that changing. That doesn’t mean I’m closed to ideas about how it can be used elsewhere; but the measure of the Opel brand’s success will be Europe, because if you don’t win here all the discussion of exports will be irrelevant

It’s not that GM’s Korean Daewoo division doesn’t need more money. The problem is that the only bank willing to lend a dime, the Korean Development Bank, wants strings attached. Since GM came up with the cash to buy up Daewoo’s $413m rights offering, it says Daewoo is out of trouble for two more years. Or 18 months… depending on that troublesome global car market. Meanwhile, GM-Daewoo’s $5b worth of forward contracts will burn up $300m in cash every month, as the debt matures. Although KDB and GM-Daewoo’s other lenders refuse to roll any of that debt forward and have been firm about enacting safeguards before loaning the automaker more money, GM’s Nick Reilly says Daewoo can now negotiate from a position of relative strength. Emphasis on relative.