 |
| Pyeongtaek factory of Ssangyong Motors in Pyeongtaek, Gyeonggi-do. 2021.2.3/News1 © News1 Reporter Min Kyung-seok |
Interest is focused on whether Korea Development Bank, a state-owned bank, can directly solve the clues of the negotiations on the sale of Ssangyong Motors. Ssangyong Motor had only three days of operation last month due to the refusal of supply from suppliers. For this reason, even potential investors HAAH Automotive are said to have doubts about their competitiveness. In addition, Eun Seong-soo, chairman of the Financial Services Commission, emphasized the concessions of Ssangyong Motor’s stakeholders such as Korea Development Bank. It is argued that the Korea Development Bank should restore negotiation channels with HAAH, which had been suspended, to engage in discussions.
According to the financial sector on the 7th, the Korea Development Bank, the main creditor bank of Ssangyong Motors, has not operated an official negotiation channel with HAAH Automotive since the investment attraction committee (four-party council) for the sale of Ssangyong Motors was suspended at the end of January. HAAH was unable to narrow the disagreement with Mahindra, the largest shareholder of Ssangyong Motors at the time, and eventually left Korea without drawing up a P plan (pre-packaged plan).
Since then, negotiations for the sale have been underway between Ssangyong Motor and HAAH, but there is no clear progress.
HAAH’s reluctance to invest is said to be due to the aftermath of the recent suspension of operations and the suspicion of sustainable growth, such as excessive debt from Ssangyong Motor. Ssangyong Motor faced the worst situation of operating the plant for only three days out of the 17 days of operation last month due to the refusal of supply by some large companies and foreign parts suppliers.
For this reason, Ssangyong Motor is asking Korea Development Bank to provide urgent funding even before the sale negotiations are concluded. This is because if the supply is delivered in a timely manner by relieving the anxiety of partner companies, the operation of the Ssangyong Motor plant will also normalize and the doubts of potential investors can be resolved.
However, Korea Development Bank adheres to the principle that an investor’s business plan must be submitted first to apply. Korea Development Bank Chairman Lee Dong-geol presented business feasibility through agreement with potential investors as a prerequisite for Ssangyong Motor’s support at a press conference in January. Along with this, he professed, “I will not support a single won” unless the agreement is signed for three years, and the trade union dispute is stopped until the surplus.
HAAH demanded equivalent financial support from the Korea Development Bank as a condition to invest 250 million dollars (worth 280 billion won) in Ssangyong Motor, but the KDB is confronting with the position that HAAH’s investment can be reviewed beforehand.
An official from the Korea Development Bank explained, “At present, we have no choice but to wait for the preliminary rehabilitation plan to come out when Ssangyong Motor and HAAH conclude the investment agreement.” .
However, as KDB is also experiencing direct and indirect damage related to Ssangyong Motor, it is difficult to watch the sale negotiations without progress. In a letter sent to the media on the 3rd, Chairman Eun Seong-soo said, “If the situation in which discussions between stakeholders are not smoothly conducted for a longer period of time, economic and social damage is expected, all stakeholders should make a little concession to create a win-win outcome. Said there was a need to do it.
The stakeholders mentioned by Chairman Eun include Korea Development Bank. The easiest way for the KDB to solve this situation while adhering to the existing principles is to eventually restore the dialogue channel with HAAH and build a discussion directly.
An official from the financial sector said, “Since KDB was burdened with investing large-scale funds in Ssangyong Motor from the beginning, KDB presented basic principles and maintained a stance to watch over it. This may be KDB’s negotiation strategy, but the government plans to save Ssangyong Motor. “If you have decided, the Saneun needs to actively go out to end this situation,” he said.