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| An inside view of SsangYong's new SUV dubbed "Rexton Sports Dynamic" is seen in this photo, Monday. Korea Times file |
By Kim Yoo-chul
The main creditor of the ailing SsangYong Motors agreed Monday to roll over 90 billion won or some $75 million should the South Korean vehicle manufacturer repay its due this month.
"Korea Development Bank (KDB) accepted SsangYong's request for an extension on debt payment of 70 billion won and 20 billion won, due July 6 and July 19, respectively. The debt repayment schedule has been reset to Dec. 31," according to the state lender.
The extension had widely been expected. However, the KDB would have received approval from foreign banks invested in Mahindra, the Indian car manufacturer holding the largest share in the dying Korean car manufacturer. Earlier, KDB said given foreign banks' investment in Mahindra, the bank asked them to make concerted efforts to extend the roll over to SsangYong.
Mahindra was considering exiting SsangYong with the South Korean car manufacturer's Indian chairman recently telling reporters it was willing to pass over its stakes in SsangYong to potential investors. In response to the possible takeover of SsangYong, China's Jiri Holdings, parent company of Jiri holdings and Sweden's Volvo, said it has no interest in the South Korean company.
Ssangyong borrowed some 200 billion won in short-term loans from top-tier investment banks including BNP Paribas and JPMorgan via Mahindra. The borrowings based on Mahindra's agreement to own at least 51 percent in Ssangyong. As of March this year, Mahindra held 74.7 percent in SsangYong.
But despite state support, the situation isn't looking very good for Ssangyong. As of late March, the auto maker had 390 billion won of corporate debt that is due within a year. In addition to the 90 billion won loan from the KDB, its main creditor bank, Ssangyong owes about 109.2 billion won to Citibank Korea, 90 billion won to JPMorgan Chase, 47 billion won to BNP Paribas and 30 billion won to Bank of America Merrill Lynch.
SsangYong's finances are disastrous. It extended quarterly losses for 13 straight quarters from the fourth quarter of 2016 to end of the first quarter of this year. Financial advisers refused to report "views" on SsangYong as its total outstanding debts exceed assets by more than 570 billion won. Mahindra had earlier planned to invest 230 billion won on Ssangyong to help the South Korean car manufacturer develop new vehicles. However, the amount of cash support was cut to 40 billion won.
SsangYong was considering selling new shares as its last available card after Mahindra's plan to possibly unload its holdings to new investors is seeing a little progress. "Mahindra could lower it stakes in SsangYong if SsangYong finds new investors to buy new shares," an official directly involved with the matter said.
From January to May, SsangYong sold 39,206 vehicles, a drop of 32.4 percent, year-on-year. The South Korean carmaker has no electric vehicles and or even hybrid models in its product pipelines. Mahindra invested between 700 billion won and 800 billion won on SsangYong since 2010. However, it was said to have reported between 500 billion won and 600 billion won losses.
"Heavy restructuring on human resources is needed," an industry source said. Mahindra reportedly held discussions over the possibility of manufacturing Ford Motor's SUV models at SsangYong's key local plant in Pyongtaek, south of Seoul, to be rebadged with Ford's emblem on SsangYong built models.
