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UPDATE 1-GM Daewoo seeks Korean cash to survive "critical" Q2

* Says second quarter “critical” for cash position

* Company in talks with KDB, S. Korean government on funds

* Says restructuring at GM won’t affect GM Daewoo operations (Adds details, more quotes, backgrounds)

GOYANG, South Korea, April 2 (Reuters) - GM Daewoo, the South Korean unit of General Motors Corp GM.N, is optimistic it will be able to overcome a "critical" period for its cash position in the second quarter, its head said on Thursday.

“As we get into the second quarter, our cashflow becomes critical, but we are watching and we are taking action as necessary to get through this period,” Michael A. Grimaldi, president and chief executive officer of GM Daewoo Auto & Technology Co, said on the sidelines of the Seoul Motor Show.

“We are currently in discussions with our bank, KDB, we are sharing with them our plans on what we intend to invest in,” Grimaldi said.

GM Daewoo has requested additional loans from banks including main creditor Korea Development Bank (KDB) after exhausting a $2 billion credit line, the country’s state-run bank.

“I am optimistic that over this period, working with the KDB, we will find an appropriate approach to help GM Daewoo.”

Grimaldi said the company was not looking to KDB, which is a major shareholder as well as lender, to boost its equity in the company, he said.

“Any funds that we do receive from KDB or the Korean government would be for GM Daewoo in Korea,” he added, saying that no money would be sent abroad.

The company may have to consider further manufacturing cuts, Grimaldi said. While the company doesn’t plan to sell any key assets such as manufacturing operations, it may sell some service centers in Seoul, he said.

On Tuesday, General Motors warned there was a rising chance it could file for a bankruptcy by June. [ID:nN31405983]

South Korean government officials have said GM must clearly explain its plans for GM Daewoo in the U.S. auto giant’s restructuring process before asking for their help.

Seoul has not announced direct financial aid measures such as liquidity injection to automakers yet.

Grimaldi said GM Daewoo’s operations were financially independent from GM and run as standalone so would not be affected by any restructuring occurring at GM. He reiterated GM Daewoo’s previously stated plan to invest a total 2.5 trillion won in 2009 and 2010 for new products.

GM Daewoo exports about 80 percent of its output to Europe, North America and emerging markets such as China, Russia and India under the Chevrolet, Pontiac, Holden and Suzuki brands.

GM Daewoo’s sales fell 43.8 percent to 135,489 vehicles in the first quarter as the financial crisis slashed credit lines and consumers’ appetite for new cars. Its exports fell 45.1 percent during the quarter. (Additional reporting by Rhee So-eui; Editing by Lincoln Feast)

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