Ripplewood, the US private equity firm, and a Russian manufacturer have both submitted bids to acquire Daewoo Electronics, the South Korean's group's main creditor said on Wednesday.

This is the third attempt in two years to sell the loss-making electronics company, which has been run by creditors including Woori Bank and Korea Asset Management Company, since its parent group collapsed with $80bn of debt in 1999. The Korean company sells TVs, air conditioners and refrigerators.

Creditors, who own a combined 97.5 per cent stake in Daewoo, are expected to name their preferred bidder from either Ripplewood or Russia's Digilant Systems later this month, with a view to completing the sale by the end of this year.

"We are currently reviewing the bids and plan to name a preferred negotiator soon," said Woori Bank, Daewoo's main creditor. Woori declined to comment on the value of the value of the deal.

Early last year creditors rejected a Won700bn offer from India's Videocon Industries and its partner RHJ International saying it was too low. In August this year, Morgan Stanley Private Equity Asia withdrew its bid for Daewoo after conducting due diligence.

Morgan Stanley did not give a reason for withdrawing from the deal but the breakdown was reportedly due in part to demands by Daewoo's main labour union for job security.

Since Daewoo was first put up for sale, it has undergone a radical restructuring aimed at returning the company to profit. Jobs have been cut and company's car audio and navigation operations sold. However, the company reported a Won128.7bn net loss last year after the previous year's Won183.5bn loss.

The sale has drawn little interest from domestic companies as Daewoo ranks a distant third in Korea behind Samsung Electronics and LG Electronics. But Daewoo's substantial sales in Europe and the US make it appealing to overseas bidders. It runs six plants in South Korea and 18 overseas.

However, analysts said that the value of the company may fall further as sales get delayed. Daewoo would need heavy investment from a new owner to regain its competitiveness. I

Mergers and acquisition activity in Korea has fallen 18 per cent in the first three quarters of this year to $41.3bn from $50.6bn a year ago, due to the global financial crisis and the economic slowdown, according to data from Thomson Reuters.