Daewoo Electronics to cut workforce 40%

Daewoo Electronics said it would slash 40 percent of its workforce, or 1,000 to 1,200 employees, and shed its unprofitable TV and air-conditioner businesses.

The plans are part of self-help measures proposed by the electronics maker which had asked creditors to extend a debt-rescheduling program for the company.

Daewoo Electronics was placed under a debt rescheduling program in 1998 after its parent Daewoo Group collapsed in the wake of the Asian financial crisis.

Creditors will decide whether to extend the workout program for Daewoo Electronics late this month.

Daewoo Electronics laid off 1,500 employees after the planned sale of the company to a consortium led by India`s Videocon Industries fell apart due to price differences in 2007.

In August last year, a private equity unit of Morgan Stanley chosen as the preferred bidder pulled out of the process.

In January this year, sales talks with private equity firm Ripplewood Holdings also collapsed. Creditors of Daewoo Electronics have since suspended the sales process for the company.

Daewoo also proposed to scrap its loss-making TV and air-conditioner businesses and focus on refrigerators and washing machines.

The Korean company posted its first operating profit in four years last year, helped by sales of refrigerators and washing machines and the weak Korean won. Its operating profit was 3.2 trillion won and its revenue was 1.9 trillion.

Daewoo Electronics is 97.5 percent owned by creditors including the Korea Asset Management Corp, which holds a 57.4 percent share.

By Jin Hyun-joo



(hjjin@heraldm.com)