"Monitoring Negotiation Situation Closely... Will Persuade for Agreement as Soon as Possible"
[Asia Economy Reporter Kwangho Lee] Eun Sung-soo, Chairman of the Financial Services Commission, once again expressed his willingness to support Ssangyong Motor. He stated that he is closely monitoring the negotiation situation and will strive to reach an agreement as soon as possible.
Chairman Eun sent an open letter to reporters and advisory committee members the previous day regarding Ssangyong Motor, saying, "All stakeholders need to make small concessions to create a mutually beneficial outcome."
In response to some criticisms that the government's stance on Ssangyong Motor is inconsistent, Chairman Eun said, "The government's basic principle is to balance industrial aspects and financial logic in corporate restructuring," adding, "If the situation where stakeholders fail to reach an agreement prolongs, economic and social damages are expected not only for the stakeholders but also more broadly. Therefore, I believe it is necessary for all stakeholders to make small concessions to achieve a win-win result."
He further stated, "Considering comprehensively the possibility of Ssangyong Motor's business normalization and the impact on employment and industry, we will persuade stakeholders to reach an agreement."
On the 16th of last month, during a briefing to the National Assembly's Political Affairs Committee, Chairman Eun responded to a question from Yoo Ui-dong of the People Power Party, saying, "Although it seems appropriate for the Minister of Industry to speak on this, from my perspective, considering employment issues, additional support appears preferable."
Chairman Eun also revealed in a recent meeting with reporters, "What I said during the National Assembly Political Affairs Committee briefing is still valid," and added, "I have discussed this with Lee Dong-geol, Chairman of the Korea Development Bank."
Currently, Ssangyong Motor's major shareholder, India’s Mahindra & Mahindra (Mahindra), potential investor U.S.-based HAAH Automotive, creditors, and other stakeholders are negotiating to proceed with a pre-packaged rehabilitation plan (P-Plan), but have yet to reach an agreement.
The P-Plan is a restructuring method that combines corporate rehabilitation procedures (court receivership), which can enforce debt adjustments, and workouts that can provide new funds. To initiate the P-Plan, consent from commercial creditors such as large company suppliers and half of the creditors including the Korea Development Bank is required. However, due to differences in opinions among stakeholders, progress has stalled.
HAAH Automotive is demanding that the Korea Development Bank provide support of the same amount as their investment of $250 million (approximately 280 billion KRW) in Ssangyong Motor. On the other hand, the Korea Development Bank maintains that it cannot provide investment support to Ssangyong Motor without a potential investor.
Jin-gyo Bae, a member of the Justice Party, emphasized, "The most important point in the Ssangyong Motor negotiation process is the job security of workers and holding the major shareholder Mahindra strongly accountable for Ssangyong Motor’s management failure," adding, "We will continuously monitor and address necessary matters in the standing committee until Ssangyong Motor is normalized."
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