According to the financial sector on the 18th, Sangeun Lee Dong-geol, chairman of Sang-eun Lee, met with Ssangyong Motor’s president Ye Byung-tae and union chairman Jeong Il-kwon the day before. This is the first time that Chairman Lee has met Ssangyong’s labor-management representative in person since the end of last year, since the Ssangyong Motor crisis intensified.
Chairman Lee re-emphasized Saneun’s existing position at this meeting. It means that it will review additional financial support for Ssangyong Motor’s normalization only after HAAH’s investment decisions, confirmation of financing capability, and validation of future business plans are completed.
In Ssangyong Motor’s P plan, the majority shareholder, Mahindra, India, lowers its stake from 75% to 25%, and HAAH participates in a capital increase of 250 million dollars (about 280 billion won) to become the largest shareholder (51%). It was known to be. With the approval of the Central Bank of India on the 9th, the problem of reducing the stake in Mahindra has been resolved.
Nevertheless, HAAH is delaying the final investment decision. Ssangyong Motor has requested HAAH to reveal its intention to invest by the 20th.
As a result of the due diligence, HAAH is known to judge that Ssangyong Motor’s management situation is more serious than expected. Ssangyong Motor’s public interest bonds worth 370 billion won will be a huge burden. Public interest bonds include KRW 310 billion incurred before Ssangyong Motor’s self-regulation support (ARS), and KRW 60 billion in wages and various taxes for employees in January and February.
Fundamentally, the high cost business structure is pointed out as a problem. Ssangyong Motor’s cost ratio (sales to production cost ratio) of cumulative sales until the third quarter of last year reached 98.6%. It is a structure that is difficult to profit properly by selling cars. In addition, the average employee salary in 2019 was about 86 million won, which is similar to that of Kia Motors.
Chairman Lee said that Ssangyong was’easy’. It has similar meanings to saying, “You have to negotiate with the resolution to sharpen your bones” or “You have to put everything down with the resolution of’saint-immediate death’, and preemptively suggest the best plan.’
It is interpreted as meaning that it is necessary to present a card for reducing fixed costs such as personnel expenses for Ssangyong Motors in order to draw out investment decisions for HAAH. As a member, you have to make some sacrifices.
However, it is unclear whether the issue of human restructuring will be properly discussed at Ssangyong Motor, which has been deeply traumatized by the massive layoffs in 2009. Ssangyong Motor’s labor union did not respond to President Lee’s request as a condition of funding: △an extension of the collective agreement validity period from one to three years, and △submission of a memorandum of prohibition of disputed actions before turning to a surplus. It is interpreted as being virtually rejected.
KDB said that it is important for the majority shareholder and the company to come up with a plan for normalization on their own if Ssangyong Motor’s investment negotiations with HAAH fail and the P-plan progress fails. On the one hand, there are also observations that HAAH will take over after Ssangyong Motor’s legal management begins. An official from the financial sector said, “There is a difference in position with the government that suggested support for reasons such as employment issues, etc.,” and said, “If Ssangyong Motor’s self-reliance efforts are not in any way, financial support will be difficult.”
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