Ssangyong Motor Plant Shutdown Due to Refusal to Supply Parts For two days on the 24th and 28th, the operation of Ssangyong Motor’s Pyeongtaek plant was shut down due to a disruption in the procurement of parts due to the supplier’s refusal to supply. In the industry, it is reported that Ssangyong Motor is concerned about the possibility that the bills received as payments while applying for court management will be bound as public interest bonds. The photo shows Ssangyong Motor’s Pyeongtaek factory on December 24, 2020. Reporter Lee Seung-hwan▶ Click here for a larger view
Ssangyong Motor was in a position to disappear from the stock market when it was notified of a refusal to comment on the audit report for the 2020 fiscal year. Amidst difficulties in the recent initiation of the P plan (short-term court management), the bad news of listing delisting has also caused a panic of 50,000 individual investors with money tied to Ssangyong Motor. If delisting becomes a reality, the scale of damage to ants is expected to reach 100 billion won.
According to the Electronic Disclosure System of the Financial Supervisory Service on the 24th, Ssangyong Motor submitted an audit report to the Korea Exchange, which was notified of the refusal of the audit opinion by Samjeong Accounting Corporation for the 2020 fiscal year the previous day. The auditor stated the uncertainty over the continuation of the going concern and the inadequate review opinion of the internal accounting management system as reasons for refusing the audit opinion.
The accounting firm raised doubts about Ssangyong Motor’s ability to survive as a going-on company. Whether Ssangyong Motor will remain a continuing company depends on the final outcome of the financing plan required for debt repayment and other funding needs, and the financial and management improvement plan to achieve stable ordinary income. Assets that may arise as a result of this uncertainty. It is explained that it was not possible to obtain reasonable audit evidence for the company’s and liabilities and related profit and loss items.
In fact, Ssangyong Motor’s capital erosion rate was 111.76% as of the end of last year, which is completely eroded. Ssangyong Motor, which has been in the red for every quarter since the fourth quarter of 2016, recorded an operating loss of 449.4 billion won last year, greatly expanding the size of the deficit compared to the previous year. Sales also fell 18.6% year-on-year to 2.95 trillion won.
According to Article 48 of the Listing Regulations on the Korea Stock Exchange, if the audit opinion on the individual financial statements or consolidated financial statements of the recent business year is inappropriate or rejected, they are subject to delisting. However, if the auditor submits an opinion certifying that the reason has been resolved before the start of the batch trade, the delisting will be delayed if the objection from the company is accepted. Ssangyong Motor’s opposition deadline is April 13th.
Minority shareholders are devastated as Ssangyong Motor is concentrating on her limbs. This is because if there is no objection from Ssangyong Motor or if the objection is not accepted, the stock will go through a delisting procedure after reorganization. In particular, in December last year, when Ssangyong Motor applied for rehabilitation procedures to the court, the trading was suspended. However, as this situation overlapped, hopes that the trading would resume was dampened.
As of the end of last year, there were 48381 minority shareholders who owned Ssangyong Motor’s shares. The number of shares held is 38,833,069 shares (25.34% stake). When bulk trading begins, about 105.2 billion won in ant investment based on the current share price will fall into a piece of paper.
The last hope is the sale. It is reported that HAAH Automotive, which is currently being mentioned as a leading candidate for Ssangyong Motor’s acquisition, will reveal its clear intention to invest on the 26th.
This is a scenario in which Ssangyong Motors enters the P plan after receiving the Acquisition Confirmation (LOI) from HAAH and seeking the consent of the creditors and the Seoul Rehabilitation Court. Of course, if the operation of the P plan is canceled, Ssangyong Motor will have to go through rehabilitation procedures, and in this case, delisting and liquidation are inevitable.
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