Ssangyong Motor to Announce Sale Tomorrow... Rehabilitation Plan Submission Delayed by 2 Months

[Asia Economy Reporter Ki-min Lee] Ssangyong Motor, which is undergoing corporate rehabilitation procedures, will announce a sale on the 28th and begin searching for a new owner.

According to industry sources on the 27th, Ssangyong Motor recently received approval from the Seoul Bankruptcy Court to announce the sale on the 28th. Court-appointed manager Yong-won Jeong explained the sale plan to the labor union last month, including the submission of letters of intent by the end of July, preliminary due diligence by the end of August, selection of preferred negotiation candidates in September, and price negotiations by the end of October.

Additionally, Ssangyong Motor has applied to the court to extend the deadline for submitting the rehabilitation plan by two months in order to proceed with the merger and acquisition (M&A) process before the rehabilitation plan is approved. The court had set the deadline for submitting the rehabilitation plan as the 1st of next month when it initiated Ssangyong Motor’s rehabilitation procedure in April.

M&A before approval means signing an investment contract before the court approves the rehabilitation plan. In this case, the rehabilitation plan containing the investment contract details is submitted to the court.

According to Ssangyong Motor’s plan, since the sale process is expected to conclude by the end of October, the submission of the rehabilitation plan is also anticipated to be postponed until after the end of October.

Regarding the acquisition of Ssangyong Motor, HAAH Automotive, which was the preferred negotiation candidate before the rehabilitation procedure, domestic electric bus manufacturer Edison Motors, electric vehicle company K-pop Motors, and private equity affiliate Park Seok-jeon & Company have publicly expressed their intentions. It is also reported that companies from the United States and China will participate in the bidding.

Recently, Ssangyong Motor’s labor and management agreed on a self-rescue plan that includes up to two years of unpaid leave for half of the employees to ensure successful rehabilitation and M&A. Furthermore, starting this October, Ssangyong Motor plans to launch its first electric vehicle, the Korando e-Motion, in Europe and introduce the mid-size sport utility vehicle (SUV) J100 (project name) next year to improve profitability. Since last month, the New Rexton Sports and New Rexton Sports Khan have been sequentially introduced to major overseas markets such as New Zealand, Chile, Australia, and the United Kingdom.

However, it is uncertain whether the actual sale schedule will proceed smoothly as planned by Ssangyong Motor. HAAH Automotive has delayed its investment decision due to burdens such as fixed costs, and it is reported that the management situation is unfavorable, with executives responsible for U.S. sales strategy resigning one after another. Other acquisition candidates besides HAAH Automotive are facing questions regarding their financial mobilization capabilities and acquisition intentions.

It is also unclear whether the main creditor bank, the Korea Development Bank, will provide additional support to Ssangyong Motor. At a meeting this month, KDB Chairman Dong-geol Lee pointed out, "We need to carefully consider whether that (Ssangyong Motor’s self-rescue plan) is sufficient," adding, "In our judgment, they are far from prepared and the conditions are not met."