중앙데일리

Ssangyong fails to get nod from creditors

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Dec 12,2009
Ssangyong Motor’s fate is dangling by a thread after it failed again to get approval from major creditors on its turnaround plan yesterday. The plan met with strong disapproval from foreign bondholders.

The company’s final destiny now lies in the hands of the court. On Thursday, the Seoul Central District Court will make its final decision on whether to approve Ssangyong’s plan or to liquidate the company.

In October, Ssangyong Motor, which is majority-owned by China’s Shanghai Automotive Industry Corp., submitted a turnaround plan to the Seoul court.

It stated that Ssangyong would cut SAIC’s stake in the company from 51 percent to 11.2 percent. Also, the plan said Ssangyong would repay its 1.23 trillion won in debt ($1.06 billion) over the course of 10 years and write off its debts at a ratio of three to one.

For the company’s turnaround plan to gain the court’s approval yesterday, it needed a three-quarters vote from its collateral-based bondholders, two-thirds from its non-collateral bondholders and half of the votes from its shareholders.

Although the company received 99.7 percent of votes from its collateral bondholders and 100 percent of votes from its shareholders, it only got 51.98 percent approval from its non-collateral bondholders, failing to meet the two-thirds requirement.

Formerly, on Nov. 6, the carmaker’s creditors and business partners opposed its turnaround plan at the Seoul Central District Court. The outcome was mainly due to disapproval by its foreign creditors, including Citibank N.A. London Branch, which holds 41 percent of the company’s non-collateral bonds.

Yesterday’s decision by the company’s foreign creditors was widely expected. Last Wednesday, Ssangyong’s foreign convertible bondholders met in Hong Kong to decide whether they should approve the carmaker’s plan. The majority voted against approval on the grounds that liquidation would bring better returns. Even if the company escapes liquidation, it will still need another owner due to its debt. Also, compared to Korea’s other carmakers, the company lacks in technology and production capacity as it has been delaying the launch of new car models due to its financial difficulties.

“We have been looking to sell to two to three foreign funds,” said Park Young-tae, Ssangyong’s management representative.


By Cho Jae-eun [jainnie@joongang.co.kr]




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