At Year-End, Ssangyong Motor Faces 90 Billion Won Maturity, Foreign Banks' 60 Billion Won Loan Default

Lack of Repayment Funds Due to Business Deterioration
"Pursuing Maturity Extension with the Relevant Institution"

[Asia Economy Reporter Kiho Sung] The liquidity crisis rumors surrounding Ssangyong Motor, which is struggling with management difficulties, have become a reality. Ssangyong Motor ultimately failed to repay loans amounting to over 60 billion KRW borrowed from foreign banks. This default is also linked to a 90 billion KRW loan from KDB Industrial Bank (KDB), raising concerns that the liquidity crisis could accelerate.

On the 15th, Ssangyong Motor disclosed through the Financial Supervisory Service's electronic disclosure system that due to worsening management conditions and insufficient repayment funds, a default of 6,006,161,000 KRW occurred. This amount corresponds to 8.02% of last year's equity capital.

Breaking down by individual banks, defaults of 2,002,031,000 KRW to JP Morgan, 1,001,090,000 KRW to BNP Paribas, and 3,003,039,000 KRW to Bank of America (BOA) Merrill Lynch were reported. A Ssangyong Motor official stated, "We will seek to extend the maturity with the respective lending institutions."

According to the Financial Supervisory Service's electronic disclosure system, as of the third quarter, Ssangyong Motor's short-term borrowings (due within one year) amounted to 224.1 billion KRW, of which 74.8 billion KRW (JP Morgan 29.9 billion KRW, BNP Paribas 15 billion KRW, BOA 29.9 billion KRW, etc.) were borrowings from foreign financial institutions.

Although Ssangyong Motor is discussing loan maturity extensions with foreign banks, the outlook is not optimistic. The loans from foreign banks come with a condition that Mahindra must maintain ownership exceeding 51% of Ssangyong Motor's shares. If Mahindra relinquishes control of Ssangyong Motor, foreign financial institutions may immediately demand loan repayment from Ssangyong Motor. This could also be a burden for new investors.

To make matters worse, the 90 billion KRW loan from KDB Industrial Bank is also maturing at the end of the year. Earlier, in July, KDB decided to extend the maturity of loans of 70 billion KRW and 20 billion KRW to Ssangyong Motor. During this process, KDB required Ssangyong Motor to first resolve the loan maturity extension issues with foreign financial institutions. If foreign financial institutions do not extend the loan maturities, Ssangyong Motor would fall into default. In other words, KDB clearly stated that it cannot extend maturities for companies in default. Accordingly, Ssangyong Motor partially repaid loans from foreign financial institutions that matured in June and extended the maturity for the remainder.

As Ssangyong Motor's liquidity crisis becomes a reality, warning signals have also been raised for the sale process. Currently, the U.S. company HAAH Automotive Holdings is negotiating acquisition with Mahindra, but no concrete results have emerged. If foreign financial institutions also call in their loans amid difficulties in finding new investors, Ssangyong Motor could face the worst-case scenario of court receivership. Furthermore, if Ssangyong Motor fails to find new investors, its future will inevitably become more uncertain, as it is difficult to overcome the current situation without external assistance.

Samjong Accounting Corporation issued a "disclaimer of opinion" on Ssangyong Motor's third-quarter quarterly report. As a result, Ssangyong Motor has received a "disclaimer of opinion" for three consecutive times, including the first quarter's quarterly report and half-year report, putting it at risk of delisting.

An industry insider said, "Recently, Ssangyong Motor has been doing its best to prepare self-rescue plans through the popularity of the 'All New Rexton' and the sale of service sites," adding, "With the electric vehicle launch just around the corner next year, government support such as KDB's loan deferral is necessary to overcome the current crisis."

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