As the court begins the procedure for initiating the rehabilitation procedure (legal management) for Ssangyong Motors, interest is drawing on whether Edison Motors, a domestic electric bus company in Hamyang, can take one step closer to the acquisition. Edison Motors previously expressed its intention to take over Ssangyong Motors and US auto retailer HAAH Automotive during negotiations.
According to the legal and financial sector on the 4th, the Seoul Rehabilitation Court initiated a legal management procedure for Ssangyong Motor. It is known that the court sent an inquiry letter to Ssangyong Motor’s creditors and the Rehabilitation Court Management Committee on whether to initiate legal management of Ssangyong Motor.
Ssangyong Motors Pyeongtaek Plant./Ssangyong Motors/
After receiving the letter of intent to take over from HAAH, the preferred negotiator, Ssangyong Motor promoted short-term court management (a restructuring method in which creditors invest new funds when the P plan and the court reduce the existing debt). However, until the 31st of last month, which was set by the court as the deadline, HAAH did not submit a letter of intent to take over, and Ssangyong Motor was also unable to find potential buyers. HAAH initially promised an investment of about 250 million dollars (about 280 billion won), but it is said that Ssangyong Motor’s conjugated bonds (370 billion won) were more than the investment and was burdened by the deteriorating business situation. Ssangyong Motor’s operating loss last year was 449.4 billion won, an increase of 59% from 2019 (281.9 billion won).
The financial sector predicts that the liquidation value will be higher when comparing the surviving value of Ssangyong Motor and the liquidation value, but the view that creditors do not want bankruptcy is predominant. ·M&A attempts are expected to continue.
According to the agreement, Ssangyong Motor is reported to be able to negotiate with other investors only if the contract with HAAH is finally misapplied. In the industry, it is estimated that there will be 3 to 4 candidates, including Edison Motors, who are willing to take over Ssangyong Motor or have indicated their intention to take over after court management (court rehabilitation procedure). Established in 2015, Edison Motors produces e-Fiberd low-floor electric buses and smart T1 electric truck electric vehicles at general industrial complexes in Hamyang-gun.
Edison Motors Chairman Kang Young-kwon said in an interview with the magazine, “I have been interested in selling Ssangyong Motors since it became known. We raised initial funds through a joint venture company, and through this leverage, we can raise more funds.”
Meanwhile, Ssangyong Motor’s capital erosion rate was 111.8% based on consolidated financial statements at the end of last year, which is in a state of complete capital erosion.
Reporter Kim Jung-min