Daewoo reports record loss

Labour unions protested against a possible takeover of Daewoo by General Motors

South Korea's troubled Daewoo Motor Company said on Thursday that its loss after tax tripled to 13.7 trillion won ($10.43bn) in 2000.

That was 50% higher than the company forecast and ranks as South Korea's largest ever corporate loss.

But analysts predicted that this would not affect talks to sell Daewoo - most probably to US car giant General Motors - as the bankrupt company's troubles have been widely publicised.

It also emerged on Thursday that General Motors is seeking tax favours from South Korea's government as a key condition of any takeover of the ailing carmaker.

Tax favours

"Potential buyers of Daewoo Motor, including General Motors, must know Daewoo's problems well," said Song Sang-hoon, an analyst at Dongwon Economic Research Institute.

Banking official Jung Keun-Yong also confirmed that GM and Daewoo are in talks.

"General Motors is having talks with Daewoo Motors on key issues including labour and taxes accompanying the acquisition," he said.

Mr Jung also defended the creditor banks bailing out Daewoo, saying that this was inevitable to prevent bankruptcies among the company's suppliers and to boost Daewoo's value until its sale is completed.

The banks have promised about 728bn won ($552m) of aid for Daewoo in the first six months of this year, he said. So far they have paid out more than 419bn won.

Slow progress

The South Korean government has been trying for more than a year to sell Daewoo, but progress has been painfully slow.

General Motors has expressed an interest in buying the carmaker, but it has not publicly said anything more concrete about its intentions.

The commerce minister, Chang Jae-shik, has said he expects the US firm to announce next month that it will buy the South Korean company.

Daewoo Motor Company filed for bankruptcy in November with estimated debts of at least $10bn. It has since been kept afloat with emergency bank loans.

Since the company announced that nearly 1,800 workers would be laid off as part of a restructuring, it has been plagued by a series of violent protests by employees and trade unionists.