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According to industry sources on the 12th, Ssangyong Motor plans to submit a preliminary rehabilitation plan to the court before the commencement of corporate rehabilitation procedures on the 28th.
On December 21 of last year, Ssangyong made time for sale negotiations until the end of this month through the self-structuring (ARS) rehabilitation procedure. However, following Mahindra’s departure from the negotiations, US auto retailer HAAH, a leading takeover candidate, has also left Korea.
The Bank said that only creditors could not provide additional financial support while no new consignees appeared, and that it cannot agree to the P plan application at this time.
Nevertheless, Ssangyong Motor’s willingness to promote the P plan is strong. On the 4th, Ssangyong Motor Co., Ltd. said on the 4th, “We are in discussions with Mahindra Group and potential investors (HAAH) on the P plan-related procedures for smooth P plan promotion. I plan to proceed with it.”
The problem is the possibility of agreement.
P plan application is possible with a majority agreement of creditors. In order to obtain court approval, three-quarters of secured creditors such as KDB, two-thirds of unsecured creditors such as commerce creditors, and one-half shareholder consent are required.
It is reported that the original P plan significantly lowered the Mahindra holdings (74.7%) through potatoes, and HAAH participated in a capital increase of a total of 250 million dollars (about 280 billion won) to secure a 51% stake. HAAH requested financial support equal to the amount of the capital increase.
In order for Ssangyong Motor to obtain the consent of KDB, HAAH investment and a reasonable business plan must be secured. There is also a condition that Ssangyong Motor’s labor union extends the collective agreement period from the current one to three years, and that strikes or other industrial acts should not be held until the turn of the surplus.
It seems difficult to agree with partners. Ssangyong Motor stopped production until the last 10th due to refusal to supply parts manufacturers. Production is scheduled to resume on the 16th after the Lunar New Year holiday.
However, the possibility of prolonged production interruption cannot be ruled out if discussions with parts suppliers are not conducted well. In particular, foreign-affiliated and conglomerate-affiliated partners are likely to be a hindrance to future P-plan agreements as they are negative in resumption of delivery.
In the case of Mahindra, it is known that Ssangyong Motor’s asset value has risen due to the recent surge in the price of the site at the Pyeongtaek plant, raising the possibility of exerting influence as a major shareholder in the process of the P plan. If Ssangyong Motor’s debt is greater than the asset value, shareholder consent is not required, but in the opposite case, shareholder voting rights are created. Mahindra can favorably set conditions such as potatoes.
The government is saving words about whether to support Ssangyong Motor. However, it is the attitude that only the government cannot put in funds without the decision of a new owner and investment.
An industry insider said, “Ssangyong Motor and its partners are appealing for government support, but only when the basic conditions are fulfilled, the government can also receive help.”