Videocon preferred bidder for controlling stake in Daewoo

New Delhi, Sep 13 (UNI) Videocon Industries Ltd today said it has emerged as the preferred bidder for the purchase of the controlling stake in Daewoo Electronics Corp, by the creditors financial institution committee of the troubled Korean company.

Videocon and RHJ International, the holding company of US buyout fund Ripplewood, were picked last Friday as the preferred bidder to buy Daewoo Electronics.

However, reports yesterday quoted CEO Daewoo Electronics Lee Seung-chang as saying that it may oppose its proposed acquisition by Videocon Industries, unless the latter increases capial spending in it to strengthen its competitiveness.

Officials from Daewoo's creditor banks had declined to reveal the bid price, but a South Korean newspaper said the Videocon consortium offered 670 billion-680 billion Won.

Mr Seung-Chang had also denied knowledge of the sale price, saying only that he was ''disappointed'' that Daewoo's assets had been ''undervalued'' by the purchasing group.

He is planing to ask Videocon to increase research and development spending on flat panel TVs and build up production lines for white goods, reports added.

Creditor officials had said they wanted to sell Daewoo for more than 1 billion dollar, taking into account its assets and business outlook.

More details of the deal will be released once a Memorandum of Understanding is signed by the end of September, report said.

Daewoo's request for fresh investment by Videocon may hamper negotiations between the two sides, if Videocon fails to meet Daewoo expectations.

Daewoo Electronics, which was placed under a debt rescheduling programme after its parent group went bankrupt in 1999, had since streamlined its business, focusing on televisions, air conditioning units and refrigerators.

It operates six plants in South Korea and 18 overseas units. Its assets totalled 1.65 trillion Won at the end of 2005.

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