Ssangyong Motor, 'KG Consortium' as Prospective Buyer
Public Sale Starts in June... Final Buyer Contract in July
[Asia Economy Reporter Hwang Yoon-joo] Kwak Jae-sun, chairman of KG Group, has expressed his final intention to acquire Ssangyong Motor.
On the 13th, Chairman Kwak stated, "If we acquire Ssangyong Motor, we will definitely create a sustainable and good company."
When asked about the specific rehabilitation plan after acquiring Ssangyong Motor, he added, "There are still many procedures left until the final bidding," and "We will announce the plan after the main contract."
On the same day, the Seoul Rehabilitation Court selected the 'KG Consortium' as the prospective acquirer of Ssangyong Motor. This came 47 days after the Edison Motors Consortium's acquisition fell through. Since the resale of Ssangyong Motor is proceeding via the 'stalking horse' method, the 'KG Consortium' selected as the prospective acquirer is highly likely to be chosen as the new owner.
The stalking horse method involves selecting a prospective acquirer, signing a conditional investment contract, and conducting an open bidding. If a new bidder offers a higher price, the prospective acquirer receives a matching bid, and competitive bidding takes place. The prospective acquirer is granted a kind of 'right of first refusal,' so barring any major surprises, the KG Consortium is expected to become the final acquirer of Ssangyong Motor.
Ssangyong Motor owes about 1.5 trillion KRW. This includes rehabilitation claims and secured rehabilitation claims of 835.2 billion KRW, and public interest claims of 779.3 billion KRW. If the KG Consortium is confirmed as the final acquirer, it must first repay the rehabilitation claims and secured rehabilitation claims. The repayment rate demanded by partner companies is known to be around 40-50%. Additionally, about 300 billion KRW in operating funds will be needed annually for normalization.
One reason KG Group was selected as the prospective acquirer is its financial strength. KG Group is a medium-sized enterprise that oversees KG Chemical and KG Dongbu Steel. Last year, KG Chemical and KG Dongbu Steel recorded sales of 5 trillion KRW and 3 trillion KRW, respectively. KG Chemical holds approximately 300 billion KRW in cash equivalents, and KG Dongbu Steel holds 68 billion KRW. The acquisition funds are expected to come from the sale of the environmental energy division of KG ETS, an affiliate company. The sale is estimated to be around 500 billion KRW.
The deadline for Ssangyong Motor's court management is in October. Therefore, a sale announcement will be made in June, and letters of intent (LOI) will be accepted. The main contract is planned to be signed as early as early July, followed by submitting the rehabilitation plan to the court. It is expected that court approval will be obtained by August at the latest.
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