SsangYong's new owner, Edison, takes overA Seoul court on Monday approved a local consortium's acquisition of SsangYong Motor, paving the way for the financially troubled carmaker to get back on track.
On the same day, the consortium led by electric carmaker Edison Motors signed a final deal with SsangYong to take over the SUV-focused carmaker, according to the two companies.
SsangYong was placed in court receivership last April for the second time in a decade. Its Indian parent Mahindra & Mahindra failed to find an investor due to the Covid-19 pandemic and its worsening financial status.
Under the final agreement, Edison has agreed to acquire SsangYong for 304.8 billion won ($254 million), and the money will be used to repay some of the carmaker's debt to financial institutions, a company spokesman said over the phone.
Edison has also agreed to lend 50 billion won in operating capital to SsangYong to help it stay afloat amid the extended pandemic and low demand for its models, he said.
The electric bus and truck maker is required to submit its rehabilitation plans for SsangYong to the court by March 1.
Edison has said it will set up a special purpose company to raise from 800 billion won to 1 trillion won starting this year to invest in a stake of SsangYong by issuing new shares to achieve a turnaround within three to five years.
Edison said it aims to transform 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.
SsangYong will remain under court receivership until the court approves Edison's rehabilitation plans and SsangYong's creditors accept the carmaker's initial debt settlement plans, the spokesman said. SsangYong didn't disclose the amount of overall debt.
"When all the demands are met, the court will be able to allow SsangYong to graduate from the court-led debt-rescheduling process," he said.
China-based SAIC Motor acquired a 51 percent stake in SsangYong in 2004 but relinquished control of the carmaker in 2009 in the wake of the global financial crisis.
In 2011, Mahindra acquired a 70 percent stake for 523 billion won and now holds a 74.65 percent stake in the carmaker.
For the whole of 2021, its vehicle sales fell 22 percent to 84,106 units from 107,324 a year earlier amid the pandemic and chip shortages.
SsangYong's lineup consists of the Tivoli, Korando, Rexton and Rexton Sports SUVs. Yonhap