Ssangyong Motor Loan 90 Billion Won Due This Month... KDB Bank "Considering Extension"

[Asia Economy Reporter Kangwook Cho] Ssangyong Motor has requested the Korea Development Bank (KDB) to extend the loan of 90 billion KRW maturing this month. KDB is expected to grant the extension for Ssangyong Motor's loan.

According to financial sources on the 5th, KDB is reviewing the extension of the maturity for Ssangyong Motor's loans totaling 90 billion KRW, which mature on the 6th (70 billion KRW) and the 19th (20 billion KRW). This is in response to Ssangyong Motor's request for the extension.

Financial circles believe that KDB has settled on extending the loan maturity. In fact, KDB has stated that if the 'consultation with foreign banks' is resolved, it will grant the extension to Ssangyong Motor, making the extension highly likely.

Previously, at a KDB briefing held on the 17th of last month, Choi Dae-hyun, Vice President of KDB's Corporate Finance Division, said, “(Regarding loans maturing soon) we are in discussions with other institutions for maturity extensions, and if an agreement is reached, there will be no need to recover the existing funds.”

However, whether the maturity of loans borrowed from foreign banks by Ssangyong Motor will be extended could influence KDB's decision. If foreign banks do not extend the maturity, Ssangyong Motor will have to repay or face delinquency, and loans cannot be extended for companies in delinquent status.

According to the Financial Supervisory Service's electronic disclosure system, as of the end of March this year, Ssangyong Motor's short-term borrowings (due within one year) amounted to 389.93296 billion KRW. Among these, 166.8 billion KRW were short-term borrowings from foreign financial institutions, including JP Morgan 89.9 billion KRW, BNP Paribas 47 billion KRW, and Bank of America (BOA) 29.9 billion KRW.

Ssangyong Motor announced that it partially repaid the loans from foreign financial institutions maturing in June and extended the maturity for the remainder. Since KDB has set 'consultation with foreign banks' as a condition, the likelihood of maturity extension is high.

Meanwhile, even if KDB's loan issues are resolved, Ssangyong Motor's difficulties are expected to continue. The monthly bills amount to 150 billion KRW, and not all loans will have their maturities extended. Moreover, even if the KDB loan is resolved this month, the JP Morgan loan matures in August. KDB has already drawn a line by stating in principle that Ssangyong Motor is not eligible for the Kian Fund support.