48,000 minority shareholders, letter of intent to acquire HAAH in the U.S.’key’
Appeals against bankruptcy will be filed by the 14th of the following month.
Ssangyong Motor Pyeongtaek Plant in Pyeongtaek, Gyeonggi Province. /Photo = Yonhap News
Ssangyong Motor(2,770 0.00%)Was on the verge of delisting as the company received an audit opinion rejection in the audit report for last year’s fiscal year. If Ssangyong Motor is delisted, the damage scale of minority shareholders with more than 48,000 people is expected to reach at least 100 billion won.
According to the financial investment industry on the 26th, Ssangyong Motor submitted an audit report for the 2020 fiscal year to the Korea Exchange, which was rejected by Samjung Accounting Corporation on the 23rd. The auditor cited the reasons for refusal of the audit opinion, such as the reason for the uncertainty of the continuation of the going concern and the inadequate review opinion of the internal accounting management system.
Samjeong Accounting Firm, who was in charge of the audit of Ssangyong Motor’s business report, said, “We are pursuing a funding plan and a plan to improve finance and management, but if it is difficult to survive as a going concern due to changes in future events or circumstances, we will book assets and liabilities through normal business activities. You may not be able to recover or repay them for a value,” he said.
Ssangyong Motor’s stock trading has already been suspended after receiving audit opinion rejections three times in a row, from the first quarter of last year to the semi-annual report and the third quarter report. Article 48 of the exchange’s listing regulation on the stock market stipulates that the exchange will delist the common stock in case the audit opinion on the individual financial statements or consolidated financial statements of the recent business year is inappropriate or rejected.
However, if the auditor submits a written opinion certifying that the reason has been resolved before the start of the batch trade, the delisting will be postponed. Ssangyong Motor’s objection deadline is until the 13th of the following month. Delisting can be prevented only by submitting a solution to capital erosion through securing new investors.
Ssangyong Motor’s capital erosion rate was 111.7% as of the end of last year, which is in a state of complete capital erosion. Ssangyong Motor, which has been in the red for every quarter since the fourth quarter of 2016, recorded an operating deficit of 449.3 billion won last year, and the amount of loss increased significantly from the previous year (281.9 billion won). Sales also totaled 2,9501 billion won, down 18.59% from the previous year (3,623.8 billion won).
Ssangyong Motor’s cash flow was filled with external borrowing. Short-term borrowings from 178.2 billion won at the end of 2018 rose 76.7% to 3149 billion won as of the end of last year, two years later. On the other hand, cash and cash equivalents were only 185.9 billion won. It is difficult to deal with the debt that must be paid off within a year right away.
In order for Ssangyong Motors to avoid delisting, the P plan that Ssangyong Motors has prepared for before should proceed normally. However, the plan itself became opaque as HAAH Automotive, which is mentioned as a promising takeover candidate, continued to postpone its decision.
It is reported that the Seoul Rehabilitation Court requested Ssangyong Motor to submit a letter of intent to take over from potential investors by the end of this month. If HAAH Automotive decides to invest, you can get out of the risk of delisting by submitting the P plan, but in the opposite case, legal management and delisting will be inevitable.
Ssangyong’s shareholders’ anxiety is growing. As of the end of last year, the company’s minority shareholders were 48,831 and its ownership ratio was 25.3%. Minority shareholders account for 105.1 billion won out of the current market cap of 4151 billion won when the transaction is suspended. Ssangyong Motor’s share price once exceeded 12,000 won, but since the fourth quarter of 2016, earnings deteriorated, and now it has stopped at 2,770 won.
Eunhyuk Ryu, reporter at Hankyung.com [email protected]
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