Ssangyong Motor, relieved by the direction of rescue, seems to find a clue to issues with foreign banks...

Foreign Bank Loans Also Likely to Have Maturity Extensions

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] KDB Industrial Bank (KDB) has decided to extend the maturity of a 90 billion KRW loan originally due at the end of the year, bringing some relief to Ssangyong Motor, which had been facing a liquidity crisis. In particular, with the government stepping in to provide support, there is growing optimism that issues with foreign banks, which had been overdue on loan repayments, may also find a resolution.

According to the government and industry sources on the 19th, KDB is finalizing plans to extend the maturity of the total 90 billion KRW loan to Ssangyong Motor, which is due on the 21st, once more, and is coordinating the timing of the official announcement. The 21st, the maturity date, is the most likely date for the announcement.

This decision by KDB is very welcome news for Ssangyong Motor, which was under urgent pressure. Earlier, on the 15th, Ssangyong Motor disclosed through the Financial Supervisory Service’s electronic disclosure system that due to worsening business conditions, it had a delinquency of 60.06161 billion KRW. This amount corresponds to 8.02% of its equity capital from last year. A Ssangyong Motor official stated, "We will proceed with extending the maturity with the relevant lending institutions."

The biggest issue was the 90 billion KRW loan maturity with KDB. Previously, in July, KDB decided to extend the maturity of loans amounting to 70 billion KRW and 20 billion KRW to Ssangyong Motor. During this process, KDB required Ssangyong Motor to first resolve the maturity extension issues with foreign financial institutions. If foreign financial institutions did not extend the loan maturities, Ssangyong Motor would fall into a delinquent state. Accordingly, Ssangyong Motor partially repaid loans from foreign financial institutions that matured in June and extended the maturity of the remaining loans.

However, with KDB now prioritizing the maturity extension, it appears that negotiations with foreign banks may also find a breakthrough.

In fact, Ssangyong Motor has been making continuous efforts to repay loans from foreign banks as part of its self-help measures. 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 (including 29.9 billion KRW from JP Morgan, 15 billion KRW from BNP Paribas, and 29.9 billion KRW from Bank of America (BOA)) were borrowings from foreign financial institutions. However, the delinquency amount disclosed on the 15th was 20.02031 billion KRW to JP Morgan, 10.0109 billion KRW to BNP Paribas, and 30.03039 billion KRW to Bank of America Merrill Lynch. This indicates that about 15 billion KRW was repaid after the third quarter earnings disclosure.

An industry insider said, "Ssangyong Motor is doing its best to prepare self-help plans, including the 'All New Rexton,' the electric vehicle scheduled for release next year, and the sale of service sites. If KDB extends the maturity and negotiations with foreign banks conclude successfully, we believe this crisis can be overcome."

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