Daewoo executives met with a steering committee representing the group's foreign creditors and requested that international banks freeze all of Daewoo's debt payments until March. In return, Daewoo said that the foreign banks can get access to four trillion won ($3.35 billion) of 10.1 trillion won in collateral that was originally earmarked only for Daewoo's South Korean creditors.

Daewoo also recommended the formation of a coordination committee composed of Korean and international creditors, as well as experts on corporate reform, to discuss rescheduling Daewoo's debt.

Daewoo said the steering committee didn't reject the proposal, but the foreign creditors continue to seek a preference over domestic creditors, and the group said it will continue to seek foreign creditors' cooperation.Daewoo said no further meetings have been scheduled, but one foreign banker involvedin the negotiations said discussions will continue.

The steering committee will need to formulate an agreement with Daewoo that it can then sell to the rest of the foreign banking community, and the cooperation of foreign banks will be important for the smooth resolution of the group's financial woes.Some foreign bankers appreciated the effort by Daewoo to address their concerns, but they remained skeptical that Daewoo's offer was sufficient to convince international banks to freeze its debt.Foreign bankers are concerned that the real value of the collateral will prove to be less than estimated because of the group's financial woes.

One foreign banker also said an agreement with Daewoo would prevent legal action against the group, an option some banks might want to keep open. Some foreign bankers said it is unlikely that Daewoo can on its own convince them to cooperate with a debt freeze. Bankers sought a guarantee of Daewoo's debt by the Korean government, but so far the government has said it won'tprovide such a guarantee.