Ssangyong Motor receives’rejection’ of audit opinion… Delisting crisis

Input 2021.03.23 17:43

Laid in a life-and-death Ssangyong Motor (003620)Eventually received a thankful comment’rejected’. Samjung Accounting Firm, who was in charge of Ssangyong Motor’s accounting audit, declined to submit an audit opinion on Ssangyong Motor’s business report last year. Accordingly, the suspension of Ssangyong Motor’s trading transactions is expected to continue and the delisting procedure will proceed.

On the 23rd, Ssangyong Motor submitted an audit report to the Korea Exchange, which was rejected by Samjung Accounting Corporation for the 2020 fiscal year. The auditor cited the reasons for the company’s uncertainty over the existence of the company and the inadequate review opinion of the internal accounting management system as the reasons for refusing the audit opinion.

According to Article 48 of the Korea Exchange’s listing regulation on the securities market, if the audit opinion on the individual financial statements or consolidated financial statements of the recent business year is inappropriate or rejected, the exchange will delist the common stock. 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. The deadline for filing an objection is April 13th.

Ssangyong Motor’s capital erosion rate was 111.8% based on consolidated financial statements at the end of last year, which is in a state of complete capital erosion. Ssangyong Motor, which has been in the red every year since 2017, suffered an operating loss of 449.4 billion won last year, and the size of the deficit increased more than in 2019 (281.9 billion won).

Ssangyong Motor, which is experiencing a serious liquidity crisis, is pursuing a short-term legal manager P plan to revitalize the company. However, the situation is not easy as the final investment decision of HAAH Automotive, one of the potential investors, has been delayed, and the Korea Development Bank is also showing difficulties in supporting it. The labor and management of Ssangyong Motors are discussing a plan to pay only half the wages of employees in March and April.