The head of General Motors Korea spent three and a half years negotiating a memo of understanding that sets the basic terms for GM to take control of bankrupt carmaker Daewoo Motor Co. It was signed just last month.
Perriton’s deal making included talks not only with a succession of Daewoo executives but also with roughly 60 financial institutions, chief among them the government-owned Korea Development Bank, as well as with scores of creditors, from suppliers to small investors. Early on Perriton dealt with Kim Woo Choong, the legendary CEO of Daewoo Group. But in late 1999 Kim fled the country when the full scope of Daewoo’s problems began to emerge. Kim, now wanted on numerous fraud charges, is thought to be in hiding somewhere in France. A number of his Daewoo cronies are in jail.
The persevering Perriton worked out a deal in which GM will invest $400 million to create a new, as yet unnamed company that will absorb most of Daewoo Motor’s operations. Bankers, including KDB, will put in $197 million and provide a further $2 billion in credit to allow the company to keep running.
However, Daewoo Motor still has $17 billion in liabilities stemming from Kim’s grandiose expansion scheme. Creditors will be partially repaid when and if the new company makes enough money to issue preferred stock - which may well take a decade or so. Most of the rest of the debt will likely be written off.
Expected to be finalized by the end of this year, the deal completes a circle of sorts for the 55-year-old New Zealander. In 1974 Perriton went to work for GM Korea, which then owned half of what later became Daewoo. When Perriton left South Korea in 1979 for a U.S. posting at GM, Kim had already purchased half of the company from GM’s initial partner and renamed it Daewoo Motor. By the time Perriton returned to South Korea in 1996, Kim owned the whole business and was steering it straight into trouble. Getting the maker of Leganzas back into GM’s hands has been a “full-time job,” sighs the GM exec.
