[Car Story] Ssangyong Motor's New Owner Battle... Management Plans and Funding Proof Are Key

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] The new owner candidate for Ssangyong Motor is expected to be decided soon among the ELBNT consortium, Edison Motors consortium, and Indi EV, all electric vehicle-related companies. The key issues are the Ssangyong Motor management plan and funding, which the court requested the bidders to supplement.

According to the legal and industry circles on the 25th, EY Han Young Accounting Corporation, the lead sales agent for Ssangyong Motor, plans to select one preferred negotiation partner and one backup negotiation partner by the end of this month or early next month.

Originally, the preferred negotiation partner for Ssangyong Motor was scheduled to be selected on the 29th of this month, but the Seoul Bankruptcy Court requested the companies participating in the main bidding to supplement their management plans and proof of funds by the 30th of this month. Because of this, the selection of the preferred negotiation partner may be postponed to early next month.

Industry insiders generally expect this acquisition battle to be a two-way contest between ELBNT and Edison Motors. In the main bidding, ELBNT and Edison Motors reportedly offered bids in the 500 billion KRW range, Edison Motors in the 200 billion KRW range, and Indi EV in the 100 billion KRW range. The amount necessary to realize the post-acquisition normalization plan is more important, but Indi EV’s bid was far below the minimum bid price of 300 billion KRW.

The two leading candidates plan to normalize management by transitioning to electric vehicles and expanding sales without relocating the Pyeongtaek plant, engaging in real estate development related to the move, or conducting artificial restructuring after acquiring Ssangyong Motor. Their management plan also includes a short-term goal of increasing annual sales from around 100,000 units to 300,000 units to achieve profitability.

The ELBNT consortium, considered a strong acquisition candidate, includes Pavilion Private Equity (PE) and Cardinal One Motors, the successor to HAAH, which was the previous preferred negotiation partner of Ssangyong Motor. The ELBNT consortium plans to export Ssangyong vehicles to the Middle East and Southeast Asia. Additionally, by utilizing Cardinal One Motors, which has a North American distribution network, they intend to export Ssangyong vehicles to the United States and Canada starting in 2023 to increase sales. Furthermore, they plan to actively utilize existing Ssangyong Motor personnel without layoffs by exporting semi-finished products and establishing production bases in the Saudi International Industrial Complex and India.

The Edison Motors consortium, which submitted a relatively lower bid, aims to rapidly transform Ssangyong Motor into an electric vehicle company by leveraging its existing electric bus technology along with the financial strength of Keystone PE and KCGI. After acquiring Ssangyong Motor, they plan to produce vehicles with a single-charge driving range of 450 to 800 km using battery pack technology and release 10 electric vehicle models by next year and 30 models by 2030.

However, the industry cautiously suggests that there is a possibility of the bid failing depending on the court’s request for supplementation. Since Ssangyong Motor has been undergoing rehabilitation procedures continuously, the court wants a company that can bring not only short-term rehabilitation but also long-term management stability to acquire it.

In particular, due to chronic deficits resulting in losses of several hundred billion KRW, Ssangyong Motor requires trillions of KRW in funding over the next few years to transition to eco-friendly vehicles, making steady fundraising capability essential. SM Group, which showed strong acquisition intentions, did not participate in the preliminary due diligence main bidding, considering that the investment burden in Ssangyong Motor could cause liquidity crises in its other affiliates.