KG ETS group named as SsangYong Motor's preliminary bidder

SsangYong Motor's Pyeongtaek plant in Gyeonggi [YONHAP]

A consortium led by KG ETS has been selected as the preliminary bidder for SsangYong Motor, the beleaguered carmaker said Friday.

The Seoul Bankruptcy Court is allowing the carmaker to consider the offer, and SsangYong Motor intends to sign a conditional deal with the KG consortium next week. The consortium is not the final buyer of the carmaker as SsangYong will initiate an open bid at the end of the month, and if another company offers a higher price, the preferred bidder can be changed.

The consortium includes Cactus Private Equity and Pavilion Private Equity, which itself submitted a letter of intent as an independent bidder. KG ETS and Pavilion Private Equity formed a consortium at the last minute before the deadline for the bids.

According to local news reports, the consortium submitted 900 billion won ($701 million) as the acquisition price for the financially-troubled carmaker. Another consortium led by Kanglim, a fire and tanker truck manufacturer that owns 12.4 percent share of Ssangbangwool, reportedly bid around 800 billion won.

Local electric vehicle company EL B&T also participated in the race.

"SsangYong Motor and EY Hanyong evaluated the acquisition price as well as the bidder's plan and specific details how the company would stably run SsangYong Motor's business after the acquisition," SsangYong Motor said in a statement Friday.

KG ETS is an energy company that is 47 percent owned by KG Chemical. It is listed on the Korea Exchange as Kosdaq constituent.

KG Chemical traces its roots back to Gyeonggi Chemical, established in 1954 as Korea's first fertilizer manufacturer. Gyeonggi Chemical is now called KG Chemical.

KG ETS said it will raise 500 billion won by selling its environment and energy department. KG ETS generated 197.1 billion won in net profit last year, up 640 percent on year. Its revenues surged 2,200 percent to 3.54 trillion won.

"We will try our best to strengthen the competitiveness of Korea's auto industry and create quality jobs by making SsangYong a sustainable company," KG said Friday.

A consortium led by Kanglim immediately issued a statement Friday saying it will file an injunction with the Seoul Bankruptcy Court as the alliance between KG ETS and Pavilion Private Equity violates the fair trade act.

"We are very regretful about the collusion issue of an alliance between KG and Pavilion," it said in a statement. "The Kanglim consortium will participate in the open bid regardless of the decision."

KG ETS shares fell 6 percent while KG Chemical plunged 16.85 percent. Kanglim declined 18.9 percent and Ssangbangwool was down 6.2 percent.

SsangYong's acquisition deal with a local consortium led by Edison Motors fell apart earlier in the year as the Korean electric bus manufacturer couldn't pay up.

SsangYong aims to sign the formal deal with the final buyer in June and submit its rehabilitation plan to the Seoul Bankruptcy Court in August.

On Friday, the Korea Exchange announced that it will extend the grace period and give the carmaker until Dec. 31 to improve its business. Trading of SsangYong shares was suspended after it filed for court receivership in December 2020 due to an impaired capital base.

If SsangYong fails to convince the exchange by the deadline, it could be delisted.

BY SARAH CHEA [chea.sarah@joongang.co.kr]