Ssangyong Motor Cancels M&A Investment Contract with Edison Consortium... Pursues Resale (Update)

Edison Motors Fails to Acquire Ssangyong Motor... Failure to Secure Acquisition Funds Cited as Cause

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Hyun-seok] Ssangyong Motor Company announced on the 28th that the ‘Investment Agreement for Acquisition and Merger (M&A)’ signed on January 10 was terminated as the Edison Motors consortium failed to fulfill the obligation to deposit the remaining acquisition funds by the 25th.

Earlier, after signing the investment agreement with the acquirer, Ssangyong Motor submitted a rehabilitation plan to the court on the 25th of last month, which mainly included a repayment plan for rehabilitation bonds and changes to shareholders’ rights, based on the full payment of the acquisition funds by the acquirer. The court had set the date for the creditors’ meeting to review and resolve the rehabilitation plan for April 1, 2022.

After the creditors’ meeting date was set, Ssangyong Motor made efforts to get the rehabilitation plan approved by preparing a revised plan that increased the bond repayment rate to persuade creditors and other stakeholders. However, since the Edison consortium did not deposit the remaining acquisition funds within the deadline stipulated in the investment agreement, the agreement was terminated.

On the 18th, the Edison Motors consortium requested an extension of the creditors’ meeting date, originally scheduled for April 1, citing uncertainties about Ssangyong Motor’s continued listing. However, this matter had already been well known through disclosures to the stock exchange and media reports prior to the M&A procedure announcement, and Edison should have taken this into account when preparing to recruit investors. It was not a precondition for bidding or the investment agreement.

A company official said, "Even if we accepted the request to postpone the creditors’ meeting, if the extended meeting also fails, the deadline for approving the rehabilitation plan (which would be July 1 if postponed) would be wasted, and we could lose the opportunity to seek new rehabilitation measures such as promoting resale." He added, "Ssangyong Motor has decided not to accept the request to extend the creditors’ meeting date."

Following the termination of the investment agreement with the Edison Motors consortium, Ssangyong Motor plans to quickly seek a new buyer and proceed with resale, submitting a new rehabilitation plan to the court within the legally permitted timeframe.

Ssangyong Motor emphasizes that the conditions for resale have significantly improved compared to when the M&A process began in June last year.

Above all, the J100, whose development was uncertain, has been completed and is scheduled for release at the end of June. The transition to eco-friendly vehicles, which is the future survival foundation and had no concrete execution plan, is now being realized through a strategic partnership with BYD, a global leader in electric vehicles, with the U100 set to launch in the second half of next year.

Additionally, the semi-knockdown (CKD) project with Saudi Arabia’s SNAM saw the local factory break ground in January. From 2023, export volumes of 30,000 units per year will be secured. Export orders from other countries have also increased significantly, with about 13,000 units yet to be shipped. If supply issues for semiconductors and other parts are resolved, the production line is expected to operate in two shifts, normalizing company operations.

Jeong Yong-won, the court-appointed manager of Ssangyong Motor, said, “These improvements in management conditions will increase the company’s future value and help find a more competitive buyer, so we will complete the resale as soon as possible to alleviate stakeholders’ concerns and build a foundation for long-term growth.”

He added, “We thank Edison Motors for expressing their intention to acquire and develop Ssangyong Motor during difficult times, and we wish them to grow into the best electric vehicle company. If there are future opportunities for technical collaboration with Ssangyong Motor, we will actively engage for mutual development.”