|Seen is SsangYong Motor's electric SUV, Korando e-Motion. The carmaker said Monday that it began taking reservations for the new model. Courtesy of SsangYong Motor|
By Baek Byung-yeul
SsangYong Motor looks to have finally found a new owner, as the bankrupt carmaker reached an investment agreement deal with its preferred bidder, Edison Motors.
On Monday morning, a SsangYong Motor official said that a consortium led by Edison Motors would file for a court approval to acquire a controlling stake in the debt-ridden carmaker that day, which was the deadline set by the bankruptcy court. Later in the afternoon, the bankruptcy court approved the two sides to sign a contract for the acquisition.
After the court gave its approval, the SsangYong official said that the two inked an official investment deal. "As permission was granted by the court, the two sides proceeded with the contract-signing process Monday," the official said.
The deal came two months after Edison and SsangYong had signed a memorandum of understanding for the purchase last November. Previously, the two sides had disagreed over the acquisition amount.
Edison asked SsangYong to cut the acquisition fee, saying that it had confirmed the possibility of insolvency during the due diligence period. The two sides then decided to cut 5.1 billion won out of the price for taking control of SsangYong, ending up with a price of 304.8 billion won ($254.7 million).
Edison now plans to pay a performance bond of 15 billion won to SsangYong. It had already paid 15.5 billion won to the Korean carmaker when signing the MOU last year. The combined 30.5 billion won is around 10 percent of the total acquisition amount of 304.8 billion won.
Edison is then scheduled to submit its rehabilitation plan to the bankruptcy court by March 1 to prove it can overcome SsangYong's financial problems. The M&A deal will be finalized after Edison pays out the remaining acquisition fee of 274.3 billion won and gains approvals from more than two-thirds of SsangYong's creditors.
It remains to be seen whether Edison will be able secure enough funds for the acquisition. The company is expected to raise additional funds with an investment from the local private equity fund KCGI. Keystone Private Equity, which failed to prepare the promised investment funds, was excluded from the consortium.
The industry view is that Edison's decision to invest in SsangYong was aimed at building an apartment complex in Pyeongtaek, southern Gyeonggi Province, where SsangYong's car manufacturing factory is located, rather than looking at the carmaker's technological capabilities.
However, Edison CEO Kang Young-kwon denied this view, saying, "Edison has not agreed with the speculation that it will jointly build an apartment complex at the factory site in Pyeongtaek City."
With the new investor, SsangYong Motor will be able gain momentum to switch its focus from SUVs to eco-friendly vehicles.
On Monday, SsangYong also announced that it began taking reservations for its upcoming electric SUV Korando e-Motion. Priced at between 38.8 million won ($32,355) and 43.9 million won, SsangYong said its first electric vehicle will be launched in the Korean market in March.
The company claimed the new model will be best-fit for consumers who are looking for affordable electric vehicles, as they can purchase the Korando e-Motion for under 30 million won through a government subsidy.