Negotiation Breakdown and P-Plan Rumors... Ssangyong Motor in Crisis Meets with Small and Medium Parts Suppliers

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Ssangyong Motor, caught in rumors of failed negotiations and the activation of a pre-packaged plan (P-Plan), is meeting with small and medium-sized parts suppliers. This comes as liquidity has been depleted since filing for corporate rehabilitation, with promissory notes worth more than 180 billion won maturing on the 29th.

On the 28th at 3 p.m., Ssangyong Motor's purchasing director and other executives will hold an emergency meeting with the Ssangyong Motor Cooperative Council's Emergency Measures Committee, composed of Ssangyong Motor's partner companies, to discuss countermeasures. A Ssangyong Motor official explained, "This meeting is to explain funding measures in response to the maturing promissory notes and to seek cooperation from partner companies."

Since Ssangyong Motor filed for corporate rehabilitation and applied for Autonomous Restructuring Support (ARS) on December 21 last year, some parts suppliers have stopped supplying parts or refused to extend contracts. The unpaid delivery payments to Ssangyong Motor's partner companies since October last year exceed 500 billion won.

The industry expects Ssangyong Motor to clarify rumors about the failure of sale negotiations with the major shareholder Mahindra and potential investor U.S. automotive distributor HAAH Automotive, as well as the possibility of a P-Plan. The four-party consultative body, including the Korea Development Bank, Ssangyong Motor, Mahindra, and HAAH Automotive, set a tentative negotiation deadline of the 22nd, considering share sales, capital injection, and the submission period for last year's audit report, but the deadline was missed due to significant differences in opinions regarding share issues.

Moreover, Mahindra is believed to have effectively withdrawn from negotiations by repaying 30 billion won of Ssangyong Motor's loans related to Bank of America (BoA), for which it had provided payment guarantees.