SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported) April 29, 2002
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GENERAL MOTORS CORPORATION
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(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 1-143 38-0572515
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
300 Renaissance Center, Detroit, Michigan 48265-3000
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313)-556-5000
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ITEM 5. OTHER EVENTS
On April 29, 2002, a news release was issued by General Motors Corporation
(GM) announcing an agreement with Daewoo on creation of new company. The release
is as follows:
GM AND PARTNERS REACH AGREEMENTS WITH DAEWOO
ON CREATION OF NEW COMPANY
Seoul, South Korea -- General Motors Corporation (NYSE: GM, GMH), Daewoo Motor
Company, and the Korea Development Bank acting on behalf of the Daewoo Motor
Creditors Committee, today signed final definitive agreements for the
establishment of a new automotive company. GM, certain of its business partners,
and the creditors will be the stockholders in the new company.
The new company would have annual revenues of about U.S. $5 billion and would
own and operate selected domestic and foreign assets of Daewoo Motor Company.
The transaction is expected to close within two to three months, pending court
and government approvals. Daewoo will continue to manage and operate its
businesses until closing.
"This is an important day for GM," said GM Chairman John F. Smith, Jr. "GM's
investment in this new company allows us to participate in the important South
Korean market, and share in the benefits associated with its outstanding product
development and manufacturing capabilities. This enterprise will produce a new
generation of cost competitive vehicles that can be marketed around the world."
"Today's agreements represent a significant milestone for Korea. These
agreements not only save thousands of jobs in South Korea, but also provide a
powerful boost for the industry and the economy as a whole," said Jung
Keun-yong, governor of the Korean Development Bank. "They send a powerful
message that Korea is open for business - that Korea is a good place to invest
and a good place in which to do business."
GM will invest U.S. $251 million, a 42.1 percent stake in the new company, which
has yet to be named. Daewoo creditors will hold a 33 percent stake. Certain of
GM's business partners will share the remaining 24.9 percent equity interest.
The basic framework for the definitive agreements include the following:
- The new company will be capitalized through cash contributions of U.S.
$400 million from GM and its participating business partners, and U.S.
$197 million from Daewoo creditors for ownership stakes equaling 67
percent and 33 percent respectively.
- In return for the creditors contributing selected Daewoo automotive
assets, the new company will issue to the creditors a long-term redeemable
preferred equity with a face value of U.S. $1.2 billion and an average
annual coupon rate of 3.5 percent.
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- The assets to be contributed to the new company include a total of nine
overseas subsidiaries and three manufacturing plants. The sales
subsidiaries include those in Austria, the Benelux countries, France,
Germany, Italy, Puerto Rico, Spain, Switzerland, plus Daewoo's European
parts operations in the Netherlands. The manufacturing plants are located
in Changwon and Kunsan, South Korea, and the automobile operations in
Hanoi, Vietnam.
- The manufacturing facility in Bupyong, South Korea, will remain open and
continue to supply the new company with vehicles, engines, transmissions
and components for at least six years. The agreements give the new company
an option to acquire this plant any time within the next six years.
- The new company will continue to use the Daewoo brand in Korea, in
countries where overseas subsidiaries are acquired such as those in
Western Europe, and in certain countries where independent distributors
exist. In addition, the new company's products will be exported to new
markets, such as Mexico and use established GM or GM-affiliated brands.
Final branding and distribution plans are still under development and will
be announced after the transaction close.
- The new company will also assume U.S. $573 million of primarily operating
liabilities.
- The new company will also acquire inventories associated with the acquired
assets with a value of U.S. $385 million.
- Long-term committed working capital facilities of U.S. $2 billion will be
provided to the new company by the South Korean creditors.
- Provisions will be made to ensure that Daewoo's existing customer warranty
obligations are satisfied following completion of the transaction.
- For those overseas manufacturing facilities of Daewoo Motor Company that
are not being acquired by the new company, several will continue to be
supplied parts, components and technical assistance from the new company
for a period of time.
- Many of the existing sales subsidiaries in Western Europe will be acquired
by the new company. In the United Kingdom, the sales subsidiaries will not
be acquired and it is intended that a new sales operation be created. The
distribution set-up in other European markets, which has been handled by
independent importers will be reviewed. It is intended that the new
company will establish a European Operations Center to direct and
coordinate its business in Europe.
- Nick Reilly will serve as president and chief executive officer of the new
company. In the interim, a transition team consisting of Daewoo
management, and management personnel from GM and its business partners
will be appointed to ensure a successful startup after closing.
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- It is expected that employment levels in Korea will be maintained at
current levels.
- Other facilities, subsidiaries, ventures, debts and liabilities not
included as part of the definitive agreements will be the responsibility
of the existing Daewoo Motor Company.
GM, Daewoo Motor Company and the Daewoo Motor Creditors Committee began formal
negotiations in May 2001 following more than six months of evaluation and
business plan development. The three sides signed a non-binding memorandum of
understanding in September outlining the framework for the negotiation of a
definitive agreement.
Additional information about this transaction can be found at
http://media.gm.com.
# # #
In this press release and related comments by General Motors management, our use
of the words "outlook," "expect," "anticipate," "estimate," "forecast,"
"project," "likely," "objective," "plan," "designed," "goal," "target," and
similar expressions is intended to identify forward looking statements. While
these statements represent our current judgment on what the future may hold, and
we believe these judgments are reasonable, actual results may differ materially
due to numerous important factors that are described in GM's most recent report
on SEC Form 10-K (at page II-15, 16) which may be revised or supplemented in
subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among
others, the following: changes in economic conditions, currency exchange rates
or political stability; shortages of fuel or interruptions in transportation
systems, labor strikes or work stoppages; market acceptance of the corporation's
new products; significant changes in the competitive environment; changes in
laws, regulations and tax rates; and the ability of the corporation to achieve
reductions in cost and employment levels to realize production efficiencies and
implement capital expenditures at levels and times planned by management.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MOTORS CORPORATION
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(Registrant)
Date May 1, 2002
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By
s/Peter R. Bible
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(Peter R. Bible,
Chief Accounting Officer)
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