Is a Green Light On for Ssangyong Motor Sale? "HAAH Plans Acquisition by New Company After Liquidation"

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] HAAH Automotive, a U.S. automobile distributor and a leading potential acquirer of SsangYong Motor, is reportedly expressing its intention to proceed with the acquisition of SsangYong Motor as planned by liquidating the current company and simultaneously establishing a new company.

According to SsangYong Motor on the 21st, Duke Hale, chairman of HAAH Automotive, recently established Cardinal One Motors. SsangYong Motor stated, "HAAH Automotive was an organization dedicated to business with the Chinese company Chery, but due to the deterioration of U.S.-China relations, it decided to liquidate," and added, "We have confirmed that a new company was established to focus on the business with SsangYong Motor."

Earlier, the U.S. automotive media Automotive News reported that Chairman Hale planned to abandon his plan to import and sell Chinese cars and was preparing to file for bankruptcy soon.

The U.S. tariff rate on Chinese automobiles, which was 2.5% when HAAH was established in 2014, rose to 25% following the deterioration of U.S.-China relations during the Trump administration. The situation worsened further due to the COVID-19 pandemic. It has been reported that HAAH's management situation deteriorated recently, with executives responsible for U.S. sales strategies resigning.

Chairman Hale explained to SsangYong Motor, "The dealer network and investor groups currently held understand the situation and support our plan, so there is no impact on the winding down of the China business," SsangYong Motor conveyed.

SsangYong Motor added, "The new company (Cardinal One Motors), which will be dedicated to business with SsangYong Motor, has confirmed that it will proceed with the acquisition of SsangYong Motor as planned."

This is interpreted as HAAH’s strategic investors (SI) and financial investors (FI) continuing their investments for the existing SsangYong Motor acquisition, leading to expectations inside and outside SsangYong Motor that HAAH will submit a letter of intent to acquire SsangYong Motor as planned.

However, some view it as premature to say that the SsangYong Motor sale process will gain momentum. When SsangYong Motor was pursuing a P-Plan (preliminary rehabilitation plan), HAAH, which was the preferred bidder, delayed investment decisions, and with executives resigning one after another, there is speculation that HAAH may have fallen out of the candidate pool. Including public interest bonds and subsequent investment costs, the actual funds required for acquiring SsangYong Motor are expected to be in the range of 800 billion to 1 trillion KRW.