[Asia Economy Reporter Seungjin Lee] The trade creditors and labor union of Ssangyong Motor have officially expressed their opposition to Edison Motors' acquisition of Ssangyong Motor, causing setbacks in the acquisition process.
According to the legal and industry circles on the 23rd, the Ssangyong Motor labor union submitted a statement of opinion opposing the merger and acquisition (M&A) by the Edison Motors consortium to the Seoul Bankruptcy Court that morning.
In the statement, the union said, "After four rounds of practical consultations with Edison Motors, we concluded that the plan to secure operating funds is too unrealistic and lacks specifics," adding, "Edison Motors plans to raise investors by issuing paid-in capital increase and corporate bonds secured by Ssangyong Motor, rather than self-funding."
They continued, "The consortium was supposed to be finalized by the 18th of this month to confirm the acquisition payment entity, but the consortium has not even been finalized," and pointed out, "Considering that even the consortium confirmation is facing difficulties, we can only conclude that the plans for acquisition and operating fund procurement are fictitious."
The union also criticized Edison Motors' technological capabilities. The union stated, "Upon verifying the technology aspect, we could not hide our disappointment and bewilderment," and added, "The head of Edison Motors' technology research said that the development of electric vehicle technology applicable to passenger SUVs is still at the initial stage and can only be developed through collaboration with Ssangyong Motor's research team."
Furthermore, "The second loan of 20 billion KRW that Edison Motors was supposed to pay has not been deposited," and "The loan is a secured loan with an 8% interest rate secured by the Pyeongtaek plant, and due to the non-deposit of 20 billion KRW, the execution of new car investment expenses must be reduced," they added.
Earlier, the trade creditors submitted a petition and a letter of opposition signed by partner companies to the Seoul Bankruptcy Court, requesting to restart the M&A process to find a new buyer, signaling a 'red light' for Edison Motors' acquisition of Ssangyong Motor.
Both the creditors and the union judge that the acquisition price of 304.9 billion KRW by Edison Motors is insufficient to normalize the company and secure competitiveness. Accordingly, Edison Motors requested the court to postpone the stakeholders' meeting originally scheduled for the 1st of next month to mid-May.
Edison Motors maintains that changing the acquisition fund procurement entity from Edison EV to U&I will resolve funding issues. A representative of Edison Motors said, "It is not yet the stage to worry about funding," and added, "We can supplement the funding issue through U&I."
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