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Carmaker reportedly wants to strengthen Korean operations but skeptics suspect plan to ‘cut and run’
Industry rumors of GM Korea accosting state-run Korea Development Bank to sell its stake in the carmaker is bringing back old nightmares of what is referred to as a “cut-and-run” scheme.
GM Korea is reportedly hoping to buy back its 17.02 percent stake from KDB, which is said to be hemming and hawing over the implications of the sale.
Three years ago, Ssangyong Motor Co. ― the nation’s smallest automaker ― was left high and dry when it was abandoned by its former parent company SAIC Motor Corp. (formerly Shanghai Automotive Industry Corp.).
SAIC was at the time privy to Ssangyong’s technology secrets, which were suspected of being leaked to China.
The 17.02 percent stake is in a way insignificant in that KDB does not have voting rights with it, but the bank does hold the right to veto decisions made on the GM Korea board thanks to its shares.
The stake also is symbolic of the close relations the bank has enjoyed with GM, starting more than a decade earlier when KDB ventured to invest in the company by buying a 29.9 percent share.
GM at the time was taking baby steps in Korea, and KDB later on extended substantial loans to keep it afloat.
GM Korea has now more than rebounded; its sales as of last year reached 15 trillion won ($13.6 billion), which is almost four times its sales in 2003, industry watchers said.
Analysts believe it’s hard to believe that GM Korea has ulterior motives for wanting to purchase the KDB stake.
“It seems more likely that by getting back the shares, GM Korea is trying to get a firmer footing in Korea, not the opposite,” said Lee Hyun-soo, an analyst with Kiwoom Securities.
GM Korea also denies that the plans would in any way weaken its hold in the country.
“We are always looking for diverse ways to secure opportunities for improving productivity and financial soundness,” said Kim Sang-won, a spokesperson for GM Korea.
He added that the carmaker as of now has no comment on the rumored transaction with KDB.
He stressed that GM Korea’s operations are considered as significant for GM headquarters given that the Korean office has a strong initiative in putting small and eco-friendly cars on the road that are trending at both home and abroad amid changing climate conditions.
KDB chairman Kang Man-soo was reportedly scheduled to meet with a GM Korea executive yesterday afternoon, but both the bank and the car company declined to comment, saying they could not confirm the encounter.
By Kim Ji-hyun (jemmie@heraldcorp.com)
Industry rumors of GM Korea accosting state-run Korea Development Bank to sell its stake in the carmaker is bringing back old nightmares of what is referred to as a “cut-and-run” scheme.
GM Korea is reportedly hoping to buy back its 17.02 percent stake from KDB, which is said to be hemming and hawing over the implications of the sale.
Three years ago, Ssangyong Motor Co. ― the nation’s smallest automaker ― was left high and dry when it was abandoned by its former parent company SAIC Motor Corp. (formerly Shanghai Automotive Industry Corp.).
SAIC was at the time privy to Ssangyong’s technology secrets, which were suspected of being leaked to China.
The 17.02 percent stake is in a way insignificant in that KDB does not have voting rights with it, but the bank does hold the right to veto decisions made on the GM Korea board thanks to its shares.
The stake also is symbolic of the close relations the bank has enjoyed with GM, starting more than a decade earlier when KDB ventured to invest in the company by buying a 29.9 percent share.
GM at the time was taking baby steps in Korea, and KDB later on extended substantial loans to keep it afloat.
GM Korea has now more than rebounded; its sales as of last year reached 15 trillion won ($13.6 billion), which is almost four times its sales in 2003, industry watchers said.
Analysts believe it’s hard to believe that GM Korea has ulterior motives for wanting to purchase the KDB stake.
“It seems more likely that by getting back the shares, GM Korea is trying to get a firmer footing in Korea, not the opposite,” said Lee Hyun-soo, an analyst with Kiwoom Securities.
GM Korea also denies that the plans would in any way weaken its hold in the country.
“We are always looking for diverse ways to secure opportunities for improving productivity and financial soundness,” said Kim Sang-won, a spokesperson for GM Korea.
He added that the carmaker as of now has no comment on the rumored transaction with KDB.
He stressed that GM Korea’s operations are considered as significant for GM headquarters given that the Korean office has a strong initiative in putting small and eco-friendly cars on the road that are trending at both home and abroad amid changing climate conditions.
KDB chairman Kang Man-soo was reportedly scheduled to meet with a GM Korea executive yesterday afternoon, but both the bank and the car company declined to comment, saying they could not confirm the encounter.
By Kim Ji-hyun (jemmie@heraldcorp.com)
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Articles by Korea Herald
