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| SsangYong Motor's Pyeongtaek plant in Gyeonggi Province / Yonhap |
EL B&T consortium fails to satisfy financing plan
By Kim Hyun-bin, Kim Yoo-chul
The Seoul Bankruptcy Court named an Edison Motors-led consortium, which includes the Korea Corporate Governance Improvement (KCGI) and Keystone Private Equity, as the preferred negotiator for the ailing SsangYong Motor, Wednesday.
"The court has decided on the Edison Motors-led consortium as the preferred negotiator for a controlling stake in SsangYong. Regarding Electrical Life Business and Technology (EL B&T), the company was excluded from the assessment evaluation because of the lack of a detailed financing plan," the court said in a statement.
Following the decision, the Edison Motors consortium plans to sign a "binding agreement" with SsangYong by the end of the month, and then perform due diligence on SssangYong Motors for about two weeks after this.
Then, the consortium will file a detailed plan for SsangYong's survival, which must be approved by the carmaker's creditors led by the Korea Development Bank (KDB).
The agreement will involve the consortium requesting a loan from the KDB with SsangYong-owned land, buildings and facilities being used as collateral. The consortium will also take over SsangYong's 700 billion won in outstanding bonds.
Edison Motors plans to unveil 30 electric vehicle (EV) models by 2030 after acquiring SsangYong.
Industry officials said at least 1 trillion won is needed for a full recovery of SsangYong as the cost has to include estimated spending on EV models and operating expenses.
EL B&T had submitted a proposal in the low 500 billion won range, while the Edison Motors consortium offered 200 billion won, much lower than the estimated 1 trillion won needed to revive the carmaker.
The lower-than-expected price tag led the court to request a price revision from the two candidates as it deemed their offers as insufficient.
The automotive industry overall is transitioning swiftly to electric vehicles widening the gap with SsangYong, which mainly manufactures combustion engine trucks
"The candidates must come up with a specific and realistic business plans," KDB Chairman Lee Dong-gull said earlier. "Once a preferred bidder is selected as investor, the government, company and union will come together to brainstorm a normalization plan."
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| Workers assemble cars at SsangYong Motor's Pyeongtaek plant in Gyeonggi Province. / Courtesy of SsangYong Motor |
Since April 15, SsangYong Motor has been under a debt-rescheduling process after its Indian parent company Mahindra & Mahindra failed to attract any investors due to the company's worsening financial condition, and the prolonged COVID-19 pandemic. In December 2020, the company filed for court receivership after failing to obtain approval for a rollover of 165 billion won ($148 million) in loans from creditors.
Court receivership is one step before bankruptcy provided under the country's legal system, in which the court decides whether and how to revive a company.
SsangYong is going through its third selloff procedure, with the first being to China-based SAIC Motor Corp. which acquired a 51 percent stake in the Korean company in 2004 but relinquished its control in 2009 during the global financial crisis.
In 2011, Mahindra acquired a 70 percent stake in SsangYong for 523 billion won and now holds a 74.65 percent stake in the firm.
