Next Month Rehabilitation Plan and Payment of Acquisition Price Before September... Ssangyong Motor's Normalization Accelerates

Court Selects KG Consortium as Final Acquirer of Ssangyong Motor

An advertisement for Ssangyong Motor's new car 'Torres' is displayed on the electronic billboard in front of KG Tower, Jung-gu, Seoul.

[Asia Economy Reporter Choi Dae-yeol] With the KG Consortium selected as the final prospective acquirer of Ssangyong Motor, the remaining procedures for the company's business normalization are expected to gain momentum. Inside and outside Ssangyong Motor, it is anticipated that the KG Consortium will be able to accelerate the process, as they have presented a relatively solid plan for securing operating funds after the acquisition during the acquisition process.

According to Ssangyong Motor and industry sources on the 28th, Ssangyong Motor plans to submit a rehabilitation plan to the court within next month, recognizing that the existing conditional investment contract with the KG Consortium remains valid. Afterwards, a creditors' meeting is scheduled to be held around the end of August or early September to obtain consent from creditors and shareholders regarding the rehabilitation plan. At the creditors' meeting, final approval requires the consent of at least three-quarters of secured creditors, two-thirds of rehabilitation creditors, and half of the shareholders.

The KG Consortium will first acquire new shares issued by Ssangyong Motor through a paid-in capital increase for 335.49 billion KRW. This fund must be transferred to Ssangyong Motor at least five business days before the creditors' meeting to resolve the rehabilitation plan. Separately, considering Ssangyong's immediate difficulty in fund execution, the consortium plans to lend 50 billion KRW as operating funds under the categories of raw material purchases and labor costs.

In addition to the acquisition payment and lending operating funds, the contract also includes the issuance of additional new shares to be purchased by the KG Consortium. This means acquiring new shares worth 564.51 billion KRW issued by Ssangyong Motor. These funds are also expected to be used as operating funds for Ssangyong Motor's business normalization. Specific details will be determined in the rehabilitation plan. Taking into account the acquisition payment, operating fund loans, and additional new share subscriptions, the total amount borne by the KG Consortium reaches 950 billion KRW.

Jung Yong-won, the administrator of Ssangyong Motor, stated, "From the perspective of creditors and other stakeholders, there may be some shortcomings, but compared to the investment contract with the Edison Motors Consortium, the acquisition amount has increased and the acquirer's required equity ratio has decreased, thereby effectively improving the actual repayment rate for rehabilitation creditors." He added, "By securing funds for the repayment of public interest claims, it will provide substantial help to rehabilitation creditors."