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SEOUL -- South Korea's economy minister warned yesterday that Daewoo Motor would be liquidated if its union rejects job cuts, as a looming debt deadline threatened more problems for the bankrupt car firm.

The warning from Finance and Economy Minister Jin Nyum came after Daewoo Motor's main creditor bank said on Saturday that South Korea's No 2 car maker would not get any more loans if unions did not agree to job losses.

Daewoo Motor has announced a drastic cost-cutting programme to save 900 billion won (S$1.35 billion) through 3,500 job cuts at home and reduced production at plants in Europe and India.

Creditors welcomed the programme, saying it would help the ailing company take a 450 billion won bail-out and speed up its sale to US giant General Motors (GM).

But the company's 17,000 production workers in South Korea have warned of strong protests against the plan.

""The deal hinges on whether Daewoo Motor workers are willing to share the pain through restructuring. Its survival will not be ensured if negotiations with GM break down,'' Mr Jin told a South Korean television show.

This was the government's strongest warning since Ford Motor pulled out of a US$6.9 billion (S$12 billion) takeover deal in September, forcing creditors to select GM as the final suitor to buy Daewoo Motor.

On Saturday, Korea Development Bank chief Uhm Rak Yong threatened to cut lifeline loans to Daewoo Motor, which faces maturing promissory notes worth 170 billion won between today and next Wednesday.

Its sale is the centrepiece of the dismantling of the Daewoo group, once South Korea's second-largest conglomerate. Other key Daewoo units have been under a debt rehabilitation programme.

But the company's union hit back with a warning that there would be a riot if the company pushed ahead with layoffs.

""The company must pay our three months of back salary before asking us to co-operate with corporate restructuring,'' union spokesman Choi Jong Hak said, adding that total overdue wages amounted to 110 billion won.

The warning came as labour unrest showed signs of mounting.

Some 900 workers of Samsung Commercial Vehicles in the south-eastern city of Taegu burned several trucks in violent protests last Friday against a government order to close the truck maker.

Bank chiefs and financial officials were due to meet yesterday to contain market jitters over a government decision last week to force 29 firms, including Samsung Commercial, out of business. --AFP