Ford To Bid for Kia Motors
SEOUL, South Korea (AP) _ Ford Motor Co. and three South Korean automakers submitted letters of intent today to take part in a new auction of bankrupt Kia Motors Corp.
It is the second time Kia, South Korea’s second largest automaker, has been put on the block. The first auction earlier this month failed to find a buyer.
New bids must be submitted by Sept. 21. The winner will be announced Sept. 28.
Besides the U.S.-based Ford, the other potential buyers are Hyundai Motor Co., Daewoo Motor Co. and Samsung Motors Inc.
Kia’s creditor banks rejected previous bids by the same four companies because they included demands for a writeoff of at least part of Kia’s 11.8 trillion won ($8.4 billion) debt.
The creditors had offered to write off interest on that debt over the next 10 years, an estimated 6.5 trillion won ($4.6 billion), but none of the principal.
Today, however, the creditors said they would write off 2.9 trillion won ($2.1 billion) of the principal debt along with any interest on the remainder.
Kia and its creditors said the successful bidder must buy at least 51 percent of the equity of Kia and its commercial vehicle subsidiary, Asia Motors Corp. Ford already owns 16.9 percent of Kia.
The move to sell Kia is part of the government’s effort to restructure its battered economy under a $58 billion bailout from the International Monetary Fund.
Kia’s collapse last year helped erode investor confidence in South Korea’s bloated, inefficient industries, leading to a flight of capital.
Kia produced 780,000 cars in 1997. Asia Motors can turn out 250,000 vehicles, mostly trucks and buses. The two companies employ more than 18,000 workers.