Edison Motors Fails to Pay Acquisition Fee... 'Ssangyong Motor M&A' Faces Collapse Risk

[Asia Economy Reporter Yoo Hyun-seok] The sale of Ssangyong Motor is on the verge of collapse as Edison Motors failed to pay the remaining balance of the acquisition price by the deadline. With the Ssangyong Motor labor union and trade creditors opposing Edison Motors' acquisition of Ssangyong Motor and the acquisition payment also unpaid, there is a forecast that Ssangyong Motor will terminate the merger and acquisition (M&A) contract within this month.

According to the industry on the 27th, the Edison Motors consortium failed to pay the remaining balance of 273.4 billion KRW by the payment deadline of the 25th. Earlier, the Seoul Rehabilitation Court ordered Edison Motors to pay the full acquisition price at least five business days before the date of the creditors' meeting. Since the creditors' meeting was scheduled for April 1, Edison Motors had to pay the remaining balance excluding the 30.5 billion KRW deposit already paid by the 25th of this month.

The creditors' meeting is a gathering where creditors and others resolve a rehabilitation plan that includes a debt repayment plan funded by the acquisition price. If the acquisition price is not paid, the rehabilitation plan becomes meaningless, and the creditors' meeting will not be held. Due to the non-payment of the acquisition price, Ssangyong Motor has gained the right to terminate the M&A contract signed with Edison Motors. If the contract is terminated as is, Edison Motors may not even be able to recover the deposit.

Edison Motors plans to continue the acquisition process by requesting a postponement of the creditors' meeting. Edison Motors originally intended to raise acquisition funds by attracting financial investors (FIs). However, it is facing difficulties in raising funds. Not only has the Edison Motors consortium for acquiring Ssangyong Motor not been finalized, but the party responsible for paying the acquisition price has also not been confirmed. Accordingly, only Edison Motors and Edison EV are specified as consortium members acquiring Ssangyong Motor shares in the rehabilitation plan.

Ssangyong Motor is expected to decide whether to terminate the contract by the end of this month and then obtain related approval from the court. If Ssangyong Motor does not terminate the contract and postpones the creditors' meeting, the acquisition process may continue. However, the industry views the possibility of contract termination as higher. Edison Motors strongly requested the postponement of the creditors' meeting before the payment deadline, but Ssangyong Motor reportedly was negative about it. The opposition from the labor union and trade creditors to Edison Motors' financial capability is also an obstacle.