[Asia Economy Reporter Yoo Hyun-seok] Ssangyong Motor announced on the 12th that, ahead of the creditors' meeting for the approval of the rehabilitation plan, it will promote the conversion of unpaid wage claims of employees into equity as part of an early business normalization plan.
This matter was agreed to be implemented as a separate detailed agreement during the special tripartite agreement signed on the 28th of last month between Ssangyong Motor’s labor and management and the KG Consortium, mainly concerning employment guarantees and long-term investment. As a follow-up measure, the company notified employees on the 10th with a guide containing specific details related to the equity conversion and plans to accept applications for conversion from those who wish to participate.
Ssangyong Motor explained, "This equity conversion by employees goes beyond the simple meaning of securing additional operating funds in the future; it is an expression of the will for future mutual growth with all stakeholders, including trade creditors, through a smooth merger and acquisition (M&A)."
Meanwhile, the KG Consortium, selected as the final prospective acquirer, decided to increase the acquisition price by 30 billion KRW to alleviate concerns of trade creditors related to the creditors' meeting. In particular, by involving existing trade creditors as much as possible in the new car development plan scheduled after the conclusion of the rehabilitation process, they plan to firmly establish the foundation for co-growth in the future.
This equity conversion applies to employees who apply within the submission deadline, up to approximately 130 billion KRW in unpaid wage claims and annual leave accrued since 2019.
The expected timing for the equity conversion is anticipated to be around October to December, when new shares are issued to raise operating funds as stipulated in the rehabilitation plan. If the delisting reason is resolved through the approval of the rehabilitation procedure, trading will become possible.
Since 2019, Ssangyong Motor’s labor and management have already been implementing high-intensity management reform measures, including proactive self-help efforts for business normalization such as welfare suspension, wage cuts, and unpaid leave. Ssangyong Motor emphasized, "We will firmly establish a long-term survival foundation through the successful completion of the ongoing M&A, as we are enhancing corporate competitiveness by improving the financial structure through cost reduction including flawless implementation of self-help measures and productivity improvement."
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