SsangYong Motor may get 11th hour rescue

SsangYong Motor may yet be saved, with creditors swooping in and rescuing the struggling auto company despite the parent’s decision not to bail it out.

Word of the possible lifeline for the Mahindra & Mahindra subsidiary came from Financial Services Commission Chairman Eun Sung-soo on Monday.

“I understand that the Mahindra Group has announced plans on 40 billion won [$32.6 million] of new capital support and seeking new investors, while expressing strong will in pushing ahead with management reform in effort to normalize SsangYong Motor,” Eun said in a written statement. “Amid SsangYong Motor’s normalization efforts, I expect the creditors will discuss any supportive actions.”

Three months ago, Pawan Goenka, the Indian company’s managing director, visited Seoul to seek help from Korea Development Bank (KDB), the local automaker’s main creditor.

The government and the state-owned lender at the time pushed Mahindra to lead the rescue.

It was supposed to invest 230 billion won directly in the struggling Korean automaker as part of a 500 billion won support plan for the next three years.

The board of the Indian company on Friday decided to withdraw its investment plan. It said it will not be able to inject fresh equity, but it agreed on a one-time investment of 40 billion won in the next three months.

The Korean automaker is facing intense pressure amid mounting losses only added to by the pandemic.

SsangYong Motor has been posting net losses for 12 consecutive months, and the situation is deteriorating.

In the first quarter of this year, SsangYong Motor sold 30.7 percent fewer vehicles compared to the same period a year ago.

It is the sharpest drop in the sector, with Hyundai Motor sales falling 11.4 percent, Kia Motors down 0.9 percent, GM Korea down 24.4 percent and Renault Samsung Motor off 27.6 percent.

The automaker has a 90 billion won loan from KDB that matures in July.

As of the end of last year, SsangYong Motor had 250 billion won short-term and 160 billion won in long term debt.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]