SsangYong Motor seeks slight reduction in sale price

SsangYong Motor's Korando e-Motion [SSANGYONG MOTOR]

Edison Motors lowered its offer for SsangYong Motor by 5.1 billion won from its initial proposal, according to the two auto companies Monday.

SsangYong Motor said it filed a request with the Seoul Bankruptcy Court on Dec. 17 for its approval of the discounted acquisition price.

"We submitted the request last week and are waiting for the court to approve the new acquisition price," said SsangYong Motor spokesman Monday. "We believe the result to come out within a few days."

Edison Motors, a Korean electric-bus manufacturer, initially proposed 310 billion won as the acquisition price for the cash-strapped automaker. It was selected as the preferred bidder in October.

After conducting due diligence on SsangYong Motor, it requested a cut in the acquisition price by 15 billion won due to the risk of insolvency.

EY Hanyong, the accounting firm managing the deal, was only willing to lower the price by a maximum of 5 billion won.

If the court approves the new price, Edison Motors is expected to pay 10 percent of the acquisition price this month and formally agree to the purchase.

"After the court approves the price, the next step will be Edison Motors signing the main contract," the spokesman from SsangYong Motor said.

"I believe it will not happen this year but will move into next year."

Even after signing the contract, obstacles remain before Edison Motors gains approval from the court to acquire SsangYong.

Edison Motors will have to come up with a viable rehabilitation plan for SsangYong Motor, including where it will get the funds to turn the financially-troubled automaker into a going concern as an electric vehicle (EV) manufacturer.

The rehabilitation has to be approved by at least two-thirds of the automaker's creditors to get the final nod from the Seoul Bankruptcy Court. SsangYong Motor's main creditor is the state-run Korea Development Bank (KDB).

KDB has been skeptical about the ability of Edison Motors to manage SsangYong Motor. It has also said that it will only provide financial support to Edison Motors if it is able to come up with a viable plan for running SsangYong.

"If Edison wants a loan from KDB, it must come up with specific and sustainable plans about SsangYong's future," Lee Dong-gull, chairman of the state-run bank said in a recent press conference.

"The rehabilitation plan will have to be verified by a third party that has credibility."

Edison Motor CEO Kang Young-kwon was aiming to borrow 700 billion won to 800 billion won from KDB.

SsangYong Motor, which was placed under court receivership in April 2021, reported a net loss of 239.8 billion won this year as of September, down from a net loss of 304.8 billion won a year earlier as employees took unpaid leave and assets were sold.

Kosdaq-listed Edison Motors jumped by 29.9 percent in trading Monday, closing at 26,500 won.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr[