The Chosun Ilbo daily said Ford and Hyundai submitted bidding prices under the required minimum of 5,000 won per share for each of the two automakers, and were thus eliminated from the running.

The Chosun said so far Samsung Motors Inc had the highest score, thus the most likely to win the Kia-Asia bid, followed by unlisted Daewoo Motor.

But the Chosun said that the bids submitted by Samsung and Daewoo also had problems.

The paper quoted an official from the Kia bidding office as saying: "The problem is that Samsung and Daewoo have both submitted bids with conditions that some of (Kia and Asia's) debt be written off. We are still reconfirming their positions."

A spokesman for Kia said he could not confirm any of the newspaper reports, but added: "It's not clear where the newspapers are getting their information, but if such information has been leaked then fairness of the bidding process is questionable."

Officials from Andersen Consulting and Banque Nationale de Paris, the two companies that are overseeing the bidding process, were not available for comment, and the bidding office's former phone numbers were out of service.

The Hankyoreh daily said the first bidding failed due to demands for debt writeoffs and that a second bidding process would take place soon.p"In Ford's case it bid with more than 5,000 won per share for Kia, but only 1,000 won for Asia. And Hyundai submitted bids with 100 won per share for Asia," the Hankyoreh quoted a senior government official as saying.The winning bid is scheduled to be announced on September 1.

Korea Development Bank (KDB), the two carmakers' main creditor, has said Kia Motors' total liabilities were estimated at 8.75 trillion won ($6.73 billion) at the end of March, against total assets of 7.72 trillion won.

Asia Motors had 3.07 trillion won of liabilities, compared with 1.64 trillion won of assets, it said.

It said the paid-in capital of the two automakers would be cut by 90 per cent and then raised to 1.5 trillion won for Kia Motors and 600 billion won for Asia Motors.

The bank said the management and control of Kia and Asia Motors would be handed over to buyers who take a minimum stake of 51 per cent, which comes to 1.07 trillion won.

The collapse of Kia Motors last year helped tip South Korea into its worst crisis since the Korean War a half-century ago. Former Kia chairman Kim Sun-Hong is on trial for embezzlement and the misuse of company funds.