SEOUL — When it first happened, and it did not come as a surprise to some analysts and insiders, it came crashing down hard. After all, Daewoo was the nation’s second largest conglomerate.
One year to the day July 18, Daewoo founder Kim Woo-choong put up 10 trillion won worth of collaterals and its creditors injected 4 trillion won in fresh operational loans.
About one month later, Kim was out of job and 12 Daewoo subsidiaries were each assigned to corporate workout programs in an effort to revive normal operation.
While there have been numerous problems — Daewoo left a combined debt of 70 trillion won — the selection of Ford as the preferred bidder for taking over Daewoo Motor is speeding things up.
Certainly, the disposal of the automotive unit is a central part of breaking Daewoo apart and the selection of Ford June 29 was a step in the right direction, industry analysts said.
At the current rate, Ford should complete its review of Daewoo Motor based on its proposal to pay 7.7 trillion won for the company and the takeover by early September.
While there are concerns over the anticipated reaction of the labor union, the company is concentrating on improving its corporate value, having increased its market share from less than 20 percent to 27 percent with the introduction of new models like the Rezzo.
As for the commercial vehicle business, it will first be combined with what is left of Daewoo Motor and be sold off in bits and pieces and this process should be completed by the end of the year.
In the case of Daewoo Heavy Industries, the decision is to split up the shipbuilding and machinery businesses and start anew as independent companies Aug. 1.
Both business divisions are profitable and the only problem arose from shareholders who wanted more of Daewoo Heavy Industries as it splits up and this process delayed matters by three months.
As the split-up proceeds, the shipbuilding business division is enjoying brisk orders of $1.5 billion in the first half of this year alone and the machinery division has become the best seller for excavators in China.
In the case of Daewoo Corp., the plan is to divide the company into a trading company and a construction firm, a process which is expected to be completed in early September.
Owing to the fact that the parent company has been the main source of financing for Daewoo subsidiaries, its finances are complex and took a protracted period of time to work things out.
Having gone through the process, both Daewoo International and Daewoo Construction will be reborn as companies with more assets than debts with the leftover taking in the bulk of over 20 trillion won in loans.
"Once the split up is completed, we anticipate that our international credibility will improve considerably and the two companies should achieve normal operation in no time," one Daewoo official said.
Another company which has been filled with question marks is Daewoo Electronics which appeared to have been all but sold and creditors are still trying to figure out how to dispose of it.
"Daewoo Electronics is involved in home electronics, visual systems and audio components and we are working out the best way of selling off the company," said one creditor.
On the other hand, the company posted a turnover of 1.7 trillion won with a profit of 51.2 billion won and is looking enthusiastically forward to graduating early from its workout program.
"It remains to be seen what happens with Daewoo Motor since there are some affiliated companies which are opposing the takeover by Ford and they will have to be left behind," one official of the Daewoo restructuring office said.
Also, there is the problem of who will take the responsibility for the Daewoo mess which at one time left the national economy in a complete disarray and heavily in debt.
"The general consensus is that the Daewoo founder will have to be held accountable and be subject to punishment even though he has resigned as chairman," one industry analyst said.