General Motors Co has not subscribed to the $424 million rights issue of its South Korean unit by a Wednesday deadline, according to a report, but its overseas units are now expected to take up the offer.
South Korea's cable TV YTN reported that none of the shareholders of GM Daewoo Automotive and Technology, including GM or state-owned Korea Development Bank (KDB), had participated in the rights offering.
A second subscription open to GM's overseas units will now take place until Friday, and they are expected to take up the offer, a spokesman at KDB said.
Given that GM is not allowed to take money out of the United States, it seems to have a plan from the beginning to drop the rights and use its units to buy them, a KDB spokesman said.
GM is barred from any of its own $50 billion lifeline from the U.S. government to support overseas and would have to dip into money from its non-U.S. operations.
GM was not immediately available for comment.
KDB said it did not subscribe to the 491.2 billion won ($423.5 million) offer by the Wednesday deadline. It has refused to take part in the offering unless its demand including participation in GM Daewoo's management, sharing licenses for jointly developed cars and GM providing Daewoo more financial aid are met.
KDB is GM Daewoo's No.2 shareholder and its leading creditor.
The subscription process for GM Daewoo's equity rights issue is on the way. The second subscription will take place until October 23, GM Daewoo's spokesman Kim Sung-soo said by telephone.
If all shares are not sold in the second subscription, third parties can join the offering, another GM Daewoo spokeswoman said.
GM Daewoo officials declined comment on GM's participation.
Last week, GM CEO Fritz Henderson said the company would participate in GM Daewoo's rights offering with money from non-U.S. operations.
But it is not clear whether GM will put in as much as KDB wants it to.
GM has a 51 percent stake in GM Daewoo and the KDB has a 28 percent. The rest is owned by Japan's Suzuki Motor and China's SAIC Motor Corp.
The right issues follows eight months of talks between GM and KDB to secure about 1 trillion won in new loans for the cash-strapped car maker, the third largest in South Korea behind Hyundai Motor Co and Kia Motors Corp.
At stake is a key hub for small car design and engineering that is crucial to GM's plans to sell more vehicles in emerging markets and meet tougher U.S. fuel economy standards.
(Reporting by Cheon Jong-woo and Kim Yeon-hee; Editing by Lincoln Feast)