The Korea Herald


Edison Motors likely to seal SsangYong deal this week

By Hong Yoo

Published : Dec. 26, 2021 - 17:08

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Edison Motor CEO Kang Young-kwon Edison Motor CEO Kang Young-kwon
Edison Motors, South Korea’s leading EV bus maker, and the bankrupt SsangYong Motor are likely to seal their merger and acquisition deal this week.

Legal circles and automobile industry insiders expect the M&A to take place by this week or by January 7 the latest.

“We need to adjust the contents of the contract, but if the discussion goes well, it can be done within this month. If the adjustment is prolonged, it could be early January,” said an official from Edison Motors.

Seoul Bankruptcy Court had set the deadline for signing the formal M&A deal of SsangYong Motor for December 27 but plans to extend the date till January 10, 2022.

Some disagreements on employment contracts and how the acquisition will be progressed are known to have delayed the formal contract between Edison Motors and SsangYong Motor.

Edison Motors had asked for an adjustment in the acquisition price after finding additional bad assets during due diligence early December.

Once the M&A deal is sealed, the next step is coming up with a corporate rehabilitation procedure.

The plan for corporate rehabilitation procedure will have to earn approval from two-thirds of its creditors.

In fact, the deadline for submitting the plan for corporate rehabilitation procedure was July 1 but it was delayed four times until March 1, 2022.

Edison Motors is considering selling SsangYong Motor’s Pyeongtaek plant site that is valued at 900 billion won ($757.9 million), to secure liquidity by selling assets instead of making more loans.

“Selling the Pyeongtaek plant site can relieve Ssangyong Motor from debt, and making an electric vehicle plant elsewhere could support Ssangyong Motor employees, component makers, and small business owners in Pyeongtaek,” said Kang Young-kwon, CEO of Edison Motor.

If that does not work out, Edison Motors will have to renegotiate loans with the Korea Development Bank.

Edison Motors had previously sought to borrow 800 billion won, about half of 1.5 trillion won need to acquire SsangYong Motor, from the Korea Development Bank with the Pyeongtaek plant site as collateral.

But the Korea Development Bank had said no financial support will be available unless the company has a clear and sustainable business plan for SsangYong Motor and requested SsangYong Motor to present a verification of its financial and technological capability from a third party.

SsangYong Motor has suffered from plunging sales in recent years due to lack of new models and its Indian parent Mahindra & Mahindra Ltd. making no cash injection into Ssangyong.

Ssangyong was once again placed under court receivership last April.

Edison Motors was named the preferred bidder for Ssangyong by the bankruptcy court after offering 310 billion won for a controlling stake in September.

The EV bus maker wired 15.5 billion, 5 percent of its proposed acquisition price, to SsangYong Motor on November.

Edison Motors, an electric carmaker, aims to transform SsangYong into an electric vehicle-focused carmaker in the next 3 to 5 years and reach 10 trillion won in sales by 2030.