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Will US’ HAAH be able to salvage cash-strapped SsangYong Motor?

Ssangyong Motor’s factory in Pyeongtaek, Gyeonggi Province, on June 8. (Yonhap)
Ssangyong Motor’s factory in Pyeongtaek, Gyeonggi Province, on June 8. (Yonhap)

After HAAH Automotive Holdings, a US-based automobile distributor, confirmed its intention to acquire SsangYong Motor, eyes are on whether the American firm, which just gave up on its Chinese car business with a bankruptcy filing, will be able to close the deal to salvage the financially troubled automaker in Korea.

Speaking to a US media outlet, the founder and chief executive officer of HAAH Automotive, Duke Hale, revealed that it has established a new company, Cardinal One Motors, which will be submitting the letter of intention to buy a controlling stake in SsangYong this week.

Hale expressed a strong will to become the major stakeholder of SsangYong Motor, saying his company is the “optimal” buyer, the Automotive News reported.

HAAH Automotive has been the prominent bidder in talks with Mahindra & Mahindra, the Indian parent company of SsangYong Motor, after M&M put its entire 75 percent stake up for sale last year.

However, the US firm said last week it plans to file for bankruptcy, as the intensifying conflict between Washington and Beijing has scuppered imports of Chinese cars to the US market.

Despite the hardship, the company said it has not given up on plans to acquire SsangYong and to bring the automaker’s sport utility vehicle models and pickup trucks to the US and Canada.

In the interview with Automotive News, Hale said his company would offer to invest between $250 million to $350 million to buy SsangYong, and also said they would need help from Korean financial institutions, mainly the Korea Development Bank.

The suggested price is similar to the amount HAAH Automotive had previously offered.

Hale also said its partners are supportive of Cardinal One Motors’ acquisition plan and the company has already received a $50 million term sheet from one of its major investors.

Earlier this year, when HAAH said it was going to submit its letter of intention, the company requested some 250 billion won ($216 million) from KDB for financial assistance.

But HAAH Automotive failed to submit the documents to the Seoul Bankruptcy Court, saying it needed more time to look into the financial details of the automaker.

In April, SsangYong was placed under court receivership, after it failed to find a potential buyer, and also could not obtain a rollover of 165 billion-won worth of loans from creditors.

Under the sales plan, SsangYong will be receiving bids from potential buyers until Friday, and conduct preliminary reviews next month. A preferred bidder is expected to be chosen in September.

By Jo He-rim (herim@heraldcorp.com)
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