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KDB chief stresses SsangYong Motor’s sustainability as terms of financial aid

Korea Development Bank Chairman Lee Dong-gull speaks at a virtual press conference at KDB headquarters in Seoul Monday. (KDB)
Korea Development Bank Chairman Lee Dong-gull speaks at a virtual press conference at KDB headquarters in Seoul Monday. (KDB)
Policy lender Korea Development Bank Chairman Lee Dong-gull said Monday that he is closely reviewing SsangYong Motor‘s fate as a sustainable automaker while refraining from mentioning its plan to provide financial assistance to the cash-strapped company.

The focal point of SsangYong Motor must be “sustainability of business operations,” along with the shareholder‘s responsible actions and burden-sharing of all parties concerned, such as shareholders, the company and the labor union, Lee said.

Lee who is entering a second-term as the KDB chief also said he is aware of US car retailer HAAH Automotive Holdings’s bid to buy a minority stake in SsangYong Motor. But the Seoul-based institution is not engaged in the deal underway, he added.

KDB, a main creditor of SsangYong Motor, is not a party involved in talks surrounding HAAH Automotive‘s $258 million investment proposal, Lee said in a virtual press conference, adding that the parties concerned in the bilateral talks are HAAH Automotive and controlling shareholder Mahindra & Mahindra.

“It is a matter between Mahindra & Mahindra and the potential buyer,” said Lee. “KDB is not in the position to open up about it. The talks are underway behind closed doors.”

This comes as the Indian auto maker expressed its intention to cut its stake in the lossmaking Korean subsidiary in June, as the company struggled to revive its fortunes since inviting the new shareholder in 2010. Mahindra holds a 74.65 percent stake in SsangYong Motor, according to the latest disclosure.

Meanwhile, Lee said that KDB has not set a limitation in its bid to sell stakes in Hanjin Heavy Industries & Construction, in terms of whether the proposed buyer is a strategic investor or not.

Before the conference, the shipbuilder said Monday that at least a 63.44 percent stake in the company will be up for sale through open bidding. Depending on the circumstances, a proposed buyer may acquire up to a 83.45 percent stake.

Cash-strapped Hanjin Heavy is controlled by seven Korean financial institutions including KDB, as well as three Filipino firms including Rizal Commercial Banking.

Korean institutions hold 63.44 percent of Hanjin Heavy, while the Filipino party owns 20.01 percent. The Filipino group may exercise tag-along rights to opt to sell its stake along with the Korean party.

The open bidding process will start after deal managers KDB and Samil PricewaterhouseCoopers accept bid proposals by Oct. 26.

The press conferece marked Lee’s first since he extended his term as a head of the policy lender. Lee marked the first to serve a second term as the KDB chairman in 26 years.

Ahead of Lee lies a slew of restructuring deals to handle. As the Hyundai Development Co.’s acquisition deal fell to pieces, KDB is responsible for restructuring Asiana Airlines until it finds a new buyer.

KDB on Sept. 11 approved a 2.4 trillion won ($2 billion) financing to Asiana Airlines using a contingency fund, in order to help the firm pick up the pieces from the double whammy of the coronavirus impact on the aviation industry and the deal collapse.

KDB‘s majority stake sale of Daewoo Shipbuilding & Marine Engineering is awaiting approval from international antitrust bodies, including the European Union’s Competition Commission. Once the Hyundai Heavy Industries Holdings‘ proposal to acquire the Korean rival gets a greenlight as expected, the transaction may be complete by the third quarter of 2021, according to Lee. KDB also eyes sales of KDB Life Insurance to JC Partners, only to see delays in the private equtiy firm’s payment.

By Son Ji-hyoung (
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