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Creditor, authorities make last-minute efforts to revive SsangYong Motor

FSC, KDB tilt toward ‘allowing more time’ before initiating court receivership

(SsangYong Motor)
(SsangYong Motor)

Market anticipations faded out on SsangYong Motor’s business restoration as its sole likely investor remained indecisive over acquiring the stake in the cash-strapped carmaker.

While the carmaker struggles to stay afloat and financial authorities tilted toward allowing more time, eyes have turned to main creditor Korea Development Bank, which is likely to be the linchpin in the volatile scenario.

State-run lender KDB is set to send its written statement to the Seoul Bankruptcy Court within the week, revealing its opinion on whether the ailing carmaker is eligible for rehabilitation, officials said Tuesday.

The KDB statement comes in response to the request of the court, as a preliminary step to initiate the court receivership program.

“The creditor’s opinion does not hold a binding effect and it is up to the court to decide whether to initiate a rehabilitation process (for SsangYong Motor),” said an official of the KDB, apparently assuming a reserved stance.

Financial market observers, however, pointed out that in light of the acute tension of the issue, KDB’s statement is likely to tip the balance.

Aspiring to the “prepackaged plan” scenario, the carmaker has repeatedly asked for a grace period so that it may come up with a voluntary rehabilitation blueprint instead of being placed under a court receivership.

In order to meet the requirements, the company should have submitted a letter of investment intent from its sole plausible investor US-based HAAH Automotive by March 31 at the latest.

Despite the thwarted timeline, however, policymakers continued to maintain a faint hope of sustaining the struggling carmaker.

“We have not yet received an investment proposal from HAAH, but this does not mean that the company has officially declined to salvage SsangYong. It requested for more time to review investment,” Financial Services Commission Chairman Eun Sung-soo told reporters Monday.

He also added that the KDB is likely to suggest an extended timeline for the carmaker when submitting its statement to the court, as the court receivership process should be the last resort.

The prudent approach of the financial watchdog reflected the widespread view in the market that HAAH is undergoing conflicts with its own investors regarding the acquisition of the Korean carmaker.

“Something seems to be setting back (the actions from HAAH),” said a senior official of the FSC.

Last year, SsangYong Motor logged 449.4 billion won ($401 million) in operating losses, while its sales dropped 18.6 percent on-year to 2.9 trillion won and its liability rate came to 111.8 percent as of the end of the year.

Pressed by accumulating debts and losses, the company’s management and labor union reached an agreement last month to cut employees’ wages for March and April by half, extending the pay cut over the past two months in the face of court receivership.

As efforts to cut down on expenses continued, speculations arose that HAAH may be considering acquiring the Korean carmaker after it has lowered the current level of liabilities through court receivership.

If denied investment or court-backed rehabilitation, the worst-case scenario for SsangYong Motor is delisting from the stock market and the consequent liquidation process. The ailing company has recently received a disclaimer of opinion from an outside auditor over its 2020 financial statements, a preliminary procedure to the Korea Exchange’s delisting review.

Meanwhile, the company on Monday rolled out the New Rexton Sports & Khan, a face-lifted version of the bestselling Rexton series that comes in classic pickup truck format.

By Bae Hyun-jung (
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Korea Herald daum