[Asia Economy Reporter Seongpil Cho] The court's approval of Ssangyong Motor's rehabilitation plan has finalized KG Group's acquisition of Ssangyong Motor. With the conclusion of the sales process that lasted for the past 11 years, Ssangyong Motor can now actively pursue business normalization.
The Seoul Bankruptcy Court Rehabilitation Division 1 (Presiding Judge Seokyung Hwan, Chief Judges Lee Dongsik and Na Sanghoon) held a creditors' meeting on the 26th and approved Ssangyong Motor's rehabilitation plan. To receive the court's final approval, the plan must gain consent from at least three-quarters (75%) of secured creditors, two-thirds (67%) of rehabilitation creditors, and half (50%) of shareholders. At the meeting, secured creditors gave 100% consent, rehabilitation creditors 95.04%, and shareholders 100%, greatly exceeding the legal approval requirements. With this approval, Ssangyong Motor can conclude the rehabilitation process early, 1 year and 8 months after filing in December 2020. Additionally, the acquisition process by the KG consortium has been completed.
The KG consortium had previously paid the full remaining acquisition amount of 365.5 billion KRW to Ssangyong Motor on the 19th, which was 30 billion KRW more than the previously agreed 331.9 billion KRW excluding the deposit. This 30 billion KRW increase raised the cash repayment rate for rehabilitation creditors from 6.79% to 13.97%, and the effective repayment rate considering equity conversion stock value from 36.39% to 41.2%. This strong acquisition commitment by KG Group is interpreted as having played a major role in securing consent at the creditors' meeting. In contrast, Edison Motors, the preferred bidder in March, failed to pay the remaining acquisition amount, resulting in the termination of the investment contract.
Ssangyong Motor plans to begin full-scale company normalization following the approval of the rehabilitation plan and the completion of the acquisition by KG Group. In particular, according to the rehabilitation plan, the company intends to faithfully implement debt repayment, capital reduction, and equity conversion to improve financial soundness. Ssangyong Motor’s administrator, Jeong Yongwon, stated, "Since the commencement of the rehabilitation process, Ssangyong Motor has diligently implemented self-rescue measures such as unpaid leave, salary and bonus cuts, and suspension of welfare benefits, and has devoted all efforts to the company's recovery including new product development. Through the smooth execution of the rehabilitation plan, we will be reborn as a company equipped with long-term survival capabilities."
KG Group Chairman Kwak Jaeseon said, "I am very pleased that the rehabilitation plan has been approved, and I deeply thank the creditors who agreed to the plan and the Ssangyong Motor executives and employees who did their best during the rehabilitation process. Now, through synergy creation and growth exploration between the two companies, we will fully support Ssangyong Motor to regain trust from customers, partners, and other stakeholders and to achieve early business normalization."
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