Ssangyong Motor to select preferred bidder in OctoberSsangYong Motor and its lead manager said Tuesday they will select a preferred bidder and a secondary preferred bidder for the financially troubled carmaker by mid-October.
SsangYong Motor, the Korean unit of Indian carmaker Mahindra & Mahindra, and the bankruptcy court-appointed lead manager EY Hanyoung accounting firm were originally planning to pick the preferred and secondary bidders by the end of this month.
"We are planning to announce the selection of a preferred bidder for SsangYong around Oct. 12 after thoroughly reviewing the (four) bidders' funding plans to acquire SsangYong," an EY Hanyoung official said over the phone.
Three bidders — the Edison Motors-led consortium, another local consortium led by EV firm Electrical Life Business and Technology (EL B&T), and Los Angeles-based EV maker INDI EV — joined the auction to acquire SsangYong.
The Edison consortium said it will set up a special purpose company to raise 800 billion won to 1 trillion won ($684 million to $855 million) to acquire SsangYong and starting next year, increase capital by issuing new shares to achieve a turnaround within three to five years.
The electric bus and truck maker said it aims to transform the SUV-focused SsangYong into an EV-focused carmaker in the next decade in line with changes in the automobile market.
It plans to produce 10 new EV models, including the Smart S, by 2022, 20 by 2025 and 30 by 2030.
Once the preferred bidder is selected, SsangYong and EY Hanyoung plan to conduct a two-week due diligence on the bidders in October and sign a deal in November.
It is estimated that up to 1 trillion won is needed to take over the debt-laden SsangYong.
In April, SsangYong was placed under court receivership for the second time after undergoing the same process a decade earlier. Its Indian parent Mahindra & Mahindra failed to attract an investor due to the prolonged Covid-19 pandemic and its worsening financial status.
Court receivership is one step short of bankruptcy in Korea's legal system. In receivership, the court will decide whether and how to revive the company.
China-based SAIC Motor acquired a 51 percent stake in SsangYong in 2004 but relinquished its control of the carmaker in 2009 in the wake of the 2008-09 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 SUV-focused carmaker.
KPMG Samjong Accounting, the auditor of SsangYong, declined to give its opinion on the carmaker's annual financial statements for the year 2020.
SsangYong could be delisted if its accounting firm again refuses to offer an opinion on the company's annual performance for the following year after the one-year period.
In the January-August period, its sales fell 14 percent to 55,904 vehicles from 64,873 units a year earlier. Its lineup consists of the Tivoli, Korando, Rexton and Rexton Sports SUVs.
In self-help measures, SsangYong's 4,700 employees began to take two-year unpaid leave in rotation on July 12 while accepting an extension of a cut in wages and suspended welfare benefits until June 2023.
The company also plans to sell its current Pyeongtaek, Gyeonggi plant, 70 kilometers south of Seoul, in three to five years and build a new factory to focus on electric vehicles in the same city.