Ssangyong Motor Takes a Breather... 90 Billion Won Loan Maturity Extended

Mountains to Extend Until the End of This Year
Debt Recycling Theory Insufficient to Resolve Funding Shortage

[Asia Economy Reporter Jo Gang-wook] KDB Industrial Bank has confirmed the extension of the maturity for the 90 billion KRW loan that Ssangyong Motor must repay this month. While this temporarily eases Ssangyong Motor's urgent financial pressure, there are concerns that 'rolling over loans' will not resolve the funding difficulties.

According to the financial sector on the 6th, KDB Industrial Bank decided on the morning of the same day to extend the loan maturity for Ssangyong Motor until the end of this year. Earlier this month, Ssangyong Motor requested KDB Industrial Bank to extend the maturities of debts amounting to 70 billion KRW and 20 billion KRW, due on the 6th and 19th respectively.

KDB Industrial Bank had previously stated that it would grant maturity extensions to Ssangyong Motor once 'consultations with foreign banks' were resolved. If foreign banks do not agree to extend the maturity, Ssangyong Motor would have to repay or face delinquency. Loans cannot be extended for companies in delinquent status. At a briefing held on the 17th of last month, Choi Dae-hyun, Vice President of KDB Industrial Bank's Corporate Finance Division, said, "We are in discussions with other institutions to extend the maturities of loans that are due, and if an agreement is reached, there will be no need to recover existing funds."

Ssangyong Motor partially repaid and extended the maturity of loans from foreign financial institutions that matured in June. Since the debt repayment issues with foreign financial institutions have been temporarily resolved, it is interpreted that KDB Industrial Bank also extended the maturity.

However, KDB Industrial Bank's recent loan maturity extension is considered only a temporary fix. The maturity of JP Morgan's loan comes due next month. According to the Financial Supervisory Service, as of the end of March this year, Ssangyong Motor's short-term borrowings (due within one year) amount to 389.93296 billion KRW. Among these, 166.8 billion KRW in short-term borrowings were obtained from foreign financial institutions, including JP Morgan with 89.9 billion KRW, BNP Paribas with 47 billion KRW, and Bank of America (BOA) with 29.9 billion KRW.

Ssangyong Motor has requested support from the 200 billion KRW contingency fund, but the government has publicly drawn a line, stating that it is not eligible for support. Accordingly, Ssangyong Motor recently selected Samsung Securities and the European investment bank Rothschild as lead managers for the sale, and it is understood that they are gauging investment interest from potential domestic and international investors.

This content was produced with the assistance of AI translation services.