SsangYong Motor seeks buyer to bring an end to receivership
SsangYong Motor is on the block again, the troubled carmaker seeking a new owner to save the business and take it out of court receivership.
A notice of sale is being issued by the company Monday.
According to multiple media reports, SsangYong Motor received approval from the court to start the process, which comes after the controlling shareholder declined to recapitalize the troubled subsidiary, the government refused a bailout and earlier attempts to find a buyer fell through.
Earlier this year, Irvine, California-based HAAH Automotive failed to submit a letter of intent to buy the company despite hopes that it would.
The sale of the 74.65 percent owned by Mumbai’s Mahindra & Mahindra will take place in the form of an open tender process, in which multiple candidates compete with each other.
Letters of intent will be taken through the end of July, and a preferred bidder will be chosen in September, according to Chung Yong-won, a SsangYong Motor executive vice president appointed to manage the receivership proceedings.
Ernst & Young Han Young Corporation was selected to advise the sales process.
Possible bidders mentioned in the local press include Edison Motors, an electric vehicle company, and Kpop Motors, which makes electric minicars, though they may not have the financial wherewithal to come up with the funds needed to buy a company with 700 billion won in debt.
SsangYong has requested the court postpone the deadline for the submission of a finalized rehabilitation plan to Sept. 1. It was initially required to submit the plan by July 1.
The company and its unionized workers agreed earlier this month on a preliminary turnaround plan that includes putting half the workers on unpaid leave for up to two years starting next month.
Some 52 percent of the unionized workers agreed to the plan, which was proposed by management.
The plan also includes cutting executive salaries by an additional 20 percent on top of 20 percent cuts earlier this year.
Korea Development Bank (KDB), the main creditor of SsangYong, expressed skepticism about the turnaround plan, questioning whether it is good enough to attract a buyer.
SsangYong has been in court receivership since April 15 after it failed to repay the 90 billion won of debts borrowed from KDB. Receivership is a step short of bankruptcy and involves a court-led workout.
In 2019, the automaker reported a net loss of 341 billion won, and in 2020 it lost 504 billion won as vehicle sales fell 19 percent to 107,324 units.
Mahindra & Mahindra asked for a bailout for the automaker in January 2020 when it failed to find an investor to come in with capital.
BY PARK EUN-JEE [email@example.com]