[이뉴스투데이 윤진웅 기자] Ssangyong Motor, which has entered the corporate rehabilitation process, has set out to find a new owner, but it will not be easy. In the worst case, bankruptcy seems inevitable.
According to the automobile industry on the 22nd, Ssangyong Motor held a board meeting on the 21st and decided to apply for rehabilitation procedures and applied for court management to the Seoul Rehabilitation Court. Legal management refers to a system that helps companies recover, such as canceling some of their debts.
Ssangyong Motor plans to complete liquidity issues and negotiations with new investors before the rehabilitation process begins. To this end, Ssangyong Motor also received an application for withholding the start of rehabilitation procedures (ARS program). This program is a system in which the court delays the commencement of rehabilitation procedures for up to three months at the will of creditors. During the period of withholding the rehabilitation procedure, stakeholders can reach an agreement and withdraw the application for rehabilitation procedures.
Finding the new owner of Ssangyong Motor doesn’t seem easy. It is unlikely that investors will appear willingly to take over due to business difficulties. It is known that HAAH Automotive Holdings of the United States has conducted an acquisition negotiation with Mahindra and even made due diligence, but there is no such achievement. HAAH is an American automobile distributor.
In addition, it is reported that Chinese Geely and BYD, as well as battery maker CATL, showed interest in Ssangyong. However, it is difficult to expect because there has been no movement so far. The amount of funds required for Ssangyong Motor’s normalization is around 500 billion won for three years, but it is difficult for automakers to mobilize such funds in the Corona 19 situation.
If a new owner is not found, the worst is apparent, but the majority shareholder Mahindra has actually given up and it is difficult for a company with investment capacity to emerge.
Pilsoo Kim, a professor at Daelim University, said, “HAAH, an American retailer, recently mentioned as an investor, is a small company with sales of 25 billion won. It is not large enough to take over Ssangyong Motor.” “A new car is released, so it takes too much time to increase sales. It is not easy without new investors appearing. There is no way to solve it.”
If Ssangyong Motor fails to withdraw the application for rehabilitation procedures, in the worst case, the court can file a bankruptcy sentence. A specific rehabilitation plan must be presented and approved. Accordingly, all executives of Ssangyong Motor are working hard, such as submitting collective resignations. However, there is also the possibility of a large-scale restructuring further.
Ssangyong Motor is currently suffering from severe business difficulties, recording a deficit for 15 consecutive quarters. As of the third quarter of this year, this year’s cumulative sales fell 23.76% compared to the previous year to 2.62 trillion won. The operating loss amounted to 3090 billion won and the net loss reached 304.8 billion won. The amount of debt is about 1.6 trillion won, and the total borrowing is about 400 billion won. The capital erosion rate is 86.9% and the debt ratio is 1627.7%.
From January to November this year, Ssangyong Motor’s sales volume was 9,825 units, down 20.8% from the same period last year. Domestic demand decreased by 18.3% compared to the same period last year to 79439 units, and exports decreased by 30.7% to 17,386 units.
Earlier, Ssangyong Motors went through legal management procedures in 2009, 11 years ago. This is because Shanghai Motor, the largest foreign shareholder at the time, gave up Ssangyong’s management rights. Ssangyong Motor restructured more than 30% of its total workforce in order to obtain approval for the rehabilitation plan, but the unions stimulated by it went on a general strike and struck a catastrophe.
This incident, which spreads from the conflict between the police and the union, is called the’Ssangyong Motor Incident’. Until the labor and management concluded negotiations, more than 90 people, including Han Sang-gyun, head of the Ssangyong-cha branch of the KCTU were arrested or arrested by the police. About 100 police officers were injured in the process.
Meanwhile, the government has decided to operate a support group to prevent the chain shock of parts suppliers following the rehabilitation procedure of Ssangyong Motor. The policy is to solve the financial difficulties of partner companies by using policy financing programs such as Korea Development Bank.
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