Renault / Samsung Motors deal closed: Renault Samsung Motors, the new subsidiary of the Renault group
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Renault, the Samsung group and the creditor banks of Samsung Motors have initiated the transfer of capital and shares to Renault Samsung Motors, thus sealing the joint venture and asset purchase agreements. Renault will eventually control 70.1% of the capital of Renault Samsung Motors, amounting to 308 billion won (US$ 280 million). The remaining capital will be held by the Samsung group (19.9%), equivalent to 88 billion won or US$ 80 million, and the creditor banks of Samsung Motors (10%), equivalent to 44 billion won or US$ 40 million. 

The financial statements of Renault Samsung Motors will be incorporated into the consolidated financial statements of the Renault group, according to the full consolidation method. 

As agreed, Renault Samsung Motors has proceeded with the acquisition of the operating assets of Samsung Motors, including the Pusan plant, the Kiheung R&D centre and the domestic sales network. A total of 110 billion won (US$ 100 million) have been paid in cash by the new company to the banks, while 44 billion won (US$ 40 million) have been reimbursed via a debt for equity swap. With the operating assets of Samsung Motors valued at 615 billion won (US$ 560 million), half the remaining 461 billion won (US$ 420 million) will be reimbursed by a series of fixed payments over ten years beginning in 2004. The other half will be paid back gradually in instalments each year if the company is profitable. 

Renault Samsung Motors has set itself the target of 150,000 to 200,000 vehicles produced and sold under the Samsung brand in 2004. In order to ensure the new company's development, Jérôme Stoll has been appointed Chief Executive Officer. He will report to Georges Douin, Executive Vice President, Product and Strategic Planning and International Operations of the Renault group. 

The entry of Renault Samsung Motors into the scope of consolidation of the Renault group gives Renault a third brand, following the acquisition of Dacia, and strengthens the annual production target of 4,000,000 vehicles Renault is aiming to attain by 2010. It also provides the Renault-Nissan Alliance with an opportunity to boost its sales in Asia. 

(September 01, 2000)