Ssangyong Motors in Crisis, Will It Receive Support from the Kian Fund? "No Discussion... Low Possibility"

"Draft Fund Support Requirements Not Met"
KDB Industrial Bank on Ssangyong Motor Maturity Extension: "No Decision Made"

[Image source=Yonhap News]

[Asia Economy Reporter Kangwook Cho] Will the 40 trillion won-scale Industrial Stabilization Fund be injected into Ssangyong Motor, which is facing a liquidity crisis? Currently, it is understood that the possibility is almost none. This is because the eligibility criteria for the Industrial Stabilization Fund support target companies that are struggling due to the novel coronavirus (COVID-19) crisis.

On the 19th, a representative of the Industrial Stabilization Fund said in a phone call with Asia Economy, "There has been no discussion at all about supporting Ssangyong Motor so far," adding, "The possibility is slim."

The official explained, "We heard from the Korea Development Bank that Ssangyong Motor will go through the restructuring track," and "Since it does not meet the eligibility criteria for the Industrial Stabilization Fund support, it has never been a subject of discussion."

On the 14th, Eun Sung-soo, Chairman of the Financial Services Commission, emphasized the so-called 'two-track restructuring strategy' at an online press conference. Companies that suddenly face management difficulties due to the COVID-19 crisis, and companies that would have operated normally if not for COVID-19, will be sufficiently supplied with liquidity to save them, but companies unrelated to this will undergo restructuring.

The basic conditions for Industrial Stabilization Fund support are △ management difficulties due to COVID-19 △ total borrowings of 500 billion won or more △ 300 or more employees.

Ssangyong Motor has publicly demanded about 200 billion won in Industrial Stabilization Fund support. However, the Korea Development Bank judges that Ssangyong Motor, which has recorded losses for 15 consecutive quarters until the third quarter of this year and has received three consecutive 'audit refusal' opinions since the first quarter, is not simply a company facing management difficulties due to COVID-19.

Regarding the 90 billion won loan maturing on the 21st, the Korea Development Bank stated, "No decision has been made yet." This 90 billion won loan was already extended once in July.

A Korea Development Bank official said, "It is expected to be decided through discussions on the 21st."

He also emphasized, "First, the major shareholder Mahindra, who holds 74% of Ssangyong Motor's shares, must show responsible behavior," adding, "This seems to be a prerequisite for future support possibilities."

Earlier, on the 15th, Ssangyong Motor announced that it had defaulted on principal and interest totaling about 60 billion won borrowed from three foreign banks. The overdue amounts by bank are 20.02031 billion won from JP Morgan, 10.0109 billion won from BNP Paribas, and 30.03039 billion won from Bank of America Merrill Lynch.

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