The debt write-off was announced as the bidding process for the two car firms, saddled with net debts of 7.8 trillion won, began again on Thursday.

"I personally don't think it is enough," Sohn Byung-doo, FKI executive deputy chairman, told a meeting of the European Union Chamber of Commerce.

"I think it will be difficult for whoever wins."

Kia and sister firm Asia Motors Co, both of which are under court receivership after defaulting on loans last year, were put up for auction again after the first one failed last month when bidders demanded a big write-off of Kia's debt.

A spokesman for Kia said on Thursday that Hyundai Motor Co, unlisted Daewoo Motor Co, unlisted Samsung Motor and Ford Motor Co submitted letters of intent to bid.

Firms are required to submit their bidproposals by September 21. The winner and runner-up will be announced on September 28.

State-run Korea Development Bank (KDB), the main creditor bank for Kia and Asia Motors, said in a statement on Thursday total gross debt of the two automakers was 11.86 trillion won.

It said that with the 2.92 trillion won write-off, exemption of responsibility to 2.16 trillion won worth of debt guarantees, and 2.78 trillion won of interest reduction by debt rescheduling, the debt would be cut to 4.0 trillion won.

But a KDB official said the actual cost would be 7.06trillion won. He said 4.0 trillion won was the current value of the debt, but when paid back according to the creditors' schedule with interest, it would amount to 7.06 trillion won.

Sohn said he thought Samsung, the latest entry to Korea's crowded car field, would have to get out of the business if its bid for Kia failed.

"Samsung would have to give up its auto section if Ford wins," Sohn said.

"If Samsung takes over Kia, then there would be thatcompany, Daewoo and Hyundai, or three companies. If Hyundai or Daewoo take over Kia then Samsung would probably have to hold negotiations with that new company," he said.