Liquidity Dry Ssangyong Motor’s Employee Salary Down Half By February

Ssangyong Motor, facing a liquidity crisis, has decided to suspend employee wages by 50% until February this year. The plan is to continue to operate the factory and promote normalization without manpower restructuring.

According to the industry on the 25th, Ye Byung-tae Ssangyong Motor(2,770 0.00%) The president said on the company’s bulletin board that day, “We have no choice but to partially pay the wages for January and February,” and “we have no face because we have reached the worst situation.” The liquidity crisis intensified, and it became difficult to pay employee salaries.

Ssangyong’s liquidity is getting dry. Foreign parts makers, such as Borg Warner Ochang (T/C assembly) and Continental Automotive (Combimeter), refused to extend the parts supply contract with Ssangyong Motor. Eventually, Ssangyong Motor is buying parts by paying cash every day as a hurdle. On the 29th, the maturity of bills amounting to 200 billion won will arrive. More than 350 Ssangyong Motor partners have also delayed payment of over 500 billion won since October last year.

“We are paying cash for parts to small business partners,” said Yee. “The bill must be paid for materials such as unpaid bills due last month and some bills due in January and February.” He explained the reason, “If these companies go bankrupt due to non-payment, not only the domino-type parts base will collapse, but also we will suffer limping in the production itself.”

It is known that Ssangyong Motor recently sold its Chinese subsidiary’Ssangyong Railway Co., Ltd.’ to improve liquidity and submitted related documents to the Seoul Rehabilitation Court. To enter China, Ssangyong Motor Co., Ltd. was established in 2004 and promoted the establishment of a local production base, but in the end, it was unable to establish a production base in the Chinese government’s Mongni, which faced the problem of THAAD (high-altitude missile defense system).

The Chinese subsidiary has been serving as a local distributor, but net losses continued, so the total assets fell to 600 million won in September last year. In addition to overseas subsidiaries, Ssangyong Motor sold the Busan Logistics Center and Seoul Service Center last year. It is predicted that the Human Resources Development Center and Cheonan and Young Animal Resources Center will also be sold to raise cash.

The industry sees the sale of Ssangyong Motor’s non-core assets as a measure to curb workforce restructuring. In order to prevent the same situation as in 2009, when it announced that it would restructure 2646 people, it tried to secure cash by selling assets as much as possible. It is interpreted as such a tone that the chairman of the Industrial Bank of Korea Lee Dong-geol requested a memorandum of’prohibition of any war in the black’ as a condition of funding for Ssangyong Motor.

Meanwhile, it is reported that Ssangyong Motor is also experiencing difficulties in finding a new owner. Currently, it has formed a four-party consultative body with India’s Mahindra Group, which is the largest shareholder, and the US company HAAH Automotive, which is a potential investor, and Korea Development Bank, a major bond bank to discuss the sale of the stake. The negotiations must be completed within this month to normalize after completing the sale procedure and funding by next month. The four-party council had a plan to submit a term sheet (agreement on key conditions) to the Seoul Rehabilitation Court by the 22nd, but Mahindra claimed to sell the entire stake (75%) of Ssangyong Motor, and HAAH and KDB opposed this, and the agreement failed have.

Sesung Oh, reporter of Hankyung.com [email protected]
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