SEOUL, South Korea — U.S. auto giant General Motors Corp. will submit a proposal this week to take over South Korea's ailing Daewoo Motor, Daewoo's main creditor said Tuesday.

        Negotiations on the takeover will begin in a “third country” this weekend or next week, said Rhee Sung-kun, a director at the state-run Korea Development Bank.

        “Daewoo Motor, its creditors and General Motors will begin formal negotiations on the sale of the assets of Daewoo's passenger vehicle manufacturing sector and its related business,” Rhee said.

        He said GM will offer its proposal on Wednesday and will later decide whether to join with carmaker Fiat SpA. of Italy to acquire Daewoo Motor.

        GM, the world's largest auto maker, and Fiat entered negotiations to take over Daewoo Motor after Ford Motor Co. of the United States abruptly withdrew a bid in September last year. GM has spent the past few months taking a close look at Daewoo's finances and labor situation.

        South Korea's third largest car manufacturer, Daewoo Motor has the capacity produce 2 million vehicles a year at plants at home and abroad, from the Philippines to Poland.

        During the 1997-98 Asian economic crisis, Daewoo collapsed under an estimated debt of $15 billion. In November, it was put under court receivership, a process that froze all of its liabilities.

        To sweeten a deal with GM, Daewoo Motor's court-appointed management laid off one-third of the company's 16,000 workers early this year, prompting sometimes violent union protests.

        Workers fear further layoffs if GM buys Daewoo, and are concerned about reports that GM is considering abandoning Daewoo's plant in Bupyong, west of Seoul, which experts say is outdated.

        Selling Daewoo Motor is seen as a test of the government's will to carry out the corporate reforms needed to attract foreign investments.

GM will make bid for Daewoo
Ford faces tough questions over tire recall
Remington man dies
Biotech firm leads revolution
Fight brews over trade fines
Morning Memo
Tristate Summary