Mahindra and Ssangyong take a step back… Pay off the 30 billion foreign bank debt

A view of Ssangyong Motor’s Pyeongtaek plant in Gyeonggi-do. [뉴시스]

Will India’s Mahindra, the major shareholder of Ssangyong Motors, eventually withdraw? As it was revealed that Mahindra recently paid off the loans Ssangyong Motors borrowed from foreign banks, the withdrawal rumors have been further strengthened.

According to a court on the 27th, Mahindra recently repaid Ssangyong Motor’s Bank of America (BoA) Merrill Lynch loan of 30 billion won instead. A court official said, “Mahindra paid off the debt Ssangyong Motor owed to the BoA about two weeks ago. Since the debt was gone, the BoA will not participate in the Ssangyong Motor Creditors Council in the future.”

On the 15th of last month, Ssangyong Motors announced that there was a delinquency in principal and interest amounting to 60 billion won borrowed from a foreign bank. Borrowing from BoA is the largest with 30 billion won, followed by JP Morgan (20 billion won) and BNP Paribas (10 billion won).

This year, the Ssangyong Motor problem is intensifying. The sale negotiations between the US automobile distribution company HAAH Automotive and Mahindra, which showed their intention to acquire the company, recently broke down. Mahindra wants to sell the entire stake in Ssangyong Motor (75%), but HAAH and KDB Development Bank, the main creditor bank, oppose this.

Previously, the’Autonomous Restructuring Support (ARS)’ program granted to Ssangyong Motors by the Seoul Rehabilitation Court Rehabilitation Division 1 (Senior Director Kyung-Hwan Seo) is until the 28th of next month. If there is no result of autonomous restructuring in the meantime, the court can decide on the rehabilitation procedure (court administration). When the company enters court management, the asset sale and desired retirement procedures follow to repay the bonds.

Inside and outside Ssangyong Motors, the possibility of a’pre-packaged plan’ (P plan), which is an ultra-short-term legal manager for about 1 to 2 months, also flows. The purpose is to prevent the worst consequences of the company going bankrupt. The P plan is a system in which the creditors inject new funds when the court reduces debt quickly, and the agreement between the company and the creditor is the prerequisite. However, Lee Dong-geol, chairman of KDB Development Bank, said, “Before the union writes a memorandum stating that it will not engage in industrial action until the surplus comes out, we cannot apply for a single won to Ssangyong.”

Reporter Kim Young-min [email protected]