Ssangyong Motor to Hold Fate-Deciding Vote on Self-Rescue Plan Next Week... Focus on Union's Choice

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] A vote on a self-help plan involving 3,500 Ssangyong Motor union members will take place next week. As calls for fixed cost reductions grow amid corporate rehabilitation and sale procedures, attention inside and outside Ssangyong Motor is focused on the union members' decision.

According to industry sources on the 5th, the Ssangyong Motor union plans to hold a general meeting of members on the 7th and 8th to vote for or against the self-help plan aimed at normalizing Ssangyong Motor's management.

Ssangyong Motor prepared a self-help plan related to unpaid leave for two years and delivered it to the union on the 1st. Specifically, it involves implementing unpaid leave for 50% of technical staff and 30% of office management staff for one year, with a plan to renegotiate whether to maintain unpaid leave in consideration of future sales and management conditions.

Union Chairman Il-kwon Jeong held meetings with members until the previous day to explain the content and purpose of the self-help plan. While some inside and outside the industry point out that, considering Ssangyong Motor's financial structure, this is a relatively mild restructuring without workforce downsizing, it is known that there are opposing opinions among union members.

The outcome of this union member vote is expected to determine the direction of Ssangyong Motor's rehabilitation plan and sale process. If more than half of the union members approve the self-help plan, Ssangyong Motor will submit it to the court. Subsequently, schedules such as selecting a lead sales agent, announcing the sale bid, conducting preliminary due diligence, and selecting a preferred negotiation partner will proceed. Additionally, since the main creditor bank, Korea Development Bank (KDB), emphasized Ssangyong Motor's self-help efforts as a condition for additional support, there may be room for negotiation.

On the other hand, if the opposition votes exceed the majority in the self-help plan vote, Ssangyong Motor will have to create a new self-help plan, likely delaying the schedule. With the liquidation value appearing high on the accounting books, the deadline for submitting the investigation report by the investigative committee deciding Ssangyong Motor's rehabilitation or liquidation has already been postponed to the 30th of this month. Ssangyong Motor's rehabilitation claims amounted to about 370 billion KRW, including unpaid wages, but with the commencement of rehabilitation procedures, the entire staff's retirement allowances of about 300 billion KRW were also tied up as public claims.

Moreover, the possibility of uncertainty regarding KDB's support is high. KDB Chairman Dong-geol Lee previously demanded Ssangyong Motor to adopt the spirit of 'Saengjeuksa Sajuksaeng' (meaning "If you try to live, you die; if you try to die, you live"). Therefore, the government's justification for supporting Ssangyong Motor is inevitably weakened. This could be a factor causing potential investors intending to reduce investment burdens through fixed cost reductions to hesitate in investing in Ssangyong Motor.

However, some union members argue that due to Ssangyong Motor's management difficulties, they agreed to suspend employee welfare and defer 20% of wages since the end of 2019, and this year, to secure parts supply, they are receiving only 50% of wages, making it difficult to endure unpaid leave.