Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Daewoo to Be Car Firm

SEOUL, South Korea -- South Korea's ailing Daewoo group will be allowed to retain only its automobile-related operations after its restructuring is completed, a top government official said Thursday.

"All Daewoo units that can be separated from the group will be spun off and sold by the end of this year," said Lee Hun-jae, chairman of the Financial Supervisory Commission.

The commission is a government agency in charge of South Korea's corporate and financial reforms.

Its decision means that the second-largest South Korean conglomerate must sell or spin off most of its money-making units to repay its total debts of about 57 trillion won ($48 billion).

Subsidiaries expected to be affected by the decision include the group's cash cow brokerage, electronic, telecommunications and construction units.

Daewoo narrowly escaped becoming South Korea's largest-ever bankruptcy when creditors agreed in June to delay repayment of $8.3 billion in short-term debt for six months and extend $3.3 billion in new loans.

In return, Daewoo put up $8.42 billion of stock and real estate as collateral.

But doubts persisted over Daewoo's commitment and its ability to sell off dozens of affiliates within six months. Government-controlled creditor banks are pressuring Daewoo to sell all profitable subsidiaries except its core Daewoo Motors Co.

Daewoo originally had planned to submit its restructuring plan to creditor banks by Wednesday. That plan was postponed until this weekend after Daewoo refused to set a timetable to sell or spin off some of its key profitable units.

Last week, Daewoo signed a memorandum of understanding with General Motors Corp. of the United States to form an alliance in auto manufacturing.