November 15 in Kyiv a press- conference called The State and Prospects of AutoZAZ-Daewoo Project Realization was held in connection with the Daewoo Motors restructuring. As Park Sung Kyiun, the joint venture director general from the Korean side, stated, last week Daewoo Motors filed a court appeal to start the company’s restructuring procedure. The court is expected to rule that the basic funds be frozen, which is a preliminary stage of the restructuring procedure. The payments of all debts and interest will be suspended, which will allow unimpeded restructuring. This will speed up the process of property transfer to a new owner which is said to be General Motors.
Oleh Papashev, the joint venture board of directors chairman, considers there is no reason to dramatize the situation because of the events in South Korea. The only problem so far is that of settling accounts: while previously the joint venture cooperated with Daewoo Motors according to the system of payment deferment for auto parts and cars of up to 180 days, now the enterprise has been offered a advance payment system, which in Mr. Papashev’s opinion, is unprofitable. He refutes the statement that Ukraine has incurred losses as a result of the Ukrainian- Korean project. To back his words Mr. Papashev referred to statistics: in the years the joint venture worked in Ukraine $150 million of direct investment came to Ukraine, $45 million was received in loans, and the state got UAH 99.9 million in taxes. The interviewed avoided the word bankruptcy and stressed the truly Ukrainian problems of AutoZAZ-Daewoo, The Day’s correspondent Petro IZHYK reports.
Mr. Papashev was more specific a week before in Zaporizhzhia: “The destiny of Ukrainian car manufacturing lies in Ukraine’s hands, and it primarily depends on how consistent our state is in removing the impediments to developing this most essential sector of the economy.” The main impediment, in the joint venture’s opinion, is duty-free import of foreign-made cars, which is dangerously huge at present. “It is more profitable to import cars into Ukraine than to make them,” Mr. Papashev said.
According to Mr. Papashev, it is highly improbable that the new Daewoo Motors owner, whoever it may be, will give up using the company’s potential or use the car building capacities for other purposes. The new owner is also to become the legal successor to all the commitments undertaken when the joint venture was created. South Korea’s car manufacturer, KIA, which had also undergone bankruptcy procedure but has continued working, could serve as an example.
Mr. Park Sung Kyiun denied that the joint venture’s revenues will be used to pay Daewoo Motors debts: “When creating the joint venture we concluded an agreement forbidding the payment of loans, which AutoZAZ received from Korea to pay its domestic debts, from the joint venture’s revenues. We do not intend to go back on our word.”
“The destiny of the Ukrainian- Korean joint venture, Mr. Papashev continued, is completely in our own hands. The enterprise management is doing its utmost to reach the production rates of 40-50 cars per day, however, as of today, these efforts without government support are unprofitable for the enterprise. We cannot afford to sell cars at the price of $2000 while paying $600 in taxes.”
