Can the SUV Electric Car E100 Debut? Ssangyong Motor to Apply for P-Plan Early Next Month

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Will SsangYong Motor's first compact mid-size sports utility vehicle (SUV) electric car, the E100, debut in the first half of next year? Industry observers say this depends on SsangYong Motor's pre-rehabilitation plan (P-Plan) and securing funds.

According to the industry on the 31st, SsangYong Motor will finalize the detailed acquisition plan with HAAH Automotive in early next month and submit the P-Plan as an agenda item to the board of directors. This is to apply for the P-Plan to the court and proceed with a swift rehabilitation process.

HAAH plans to make a new investment of $250 million (approximately 275 billion KRW) through a third-party paid-in capital increase if the shareholding ratio of Mahindra, the major shareholder of SsangYong Motor from India, is reduced.

However, several variables remain before the P-Plan is submitted to the court. According to the Debtor Rehabilitation Act, SsangYong Motor needs the consent of creditors holding more than half of the debtor's debt to enter the P-Plan. Currently, about 60% of SsangYong Motor's current liabilities are trade payables, and it is known that the Korea Development Bank (KDB) and foreign financial institutions hold the remaining claims.

Teaser image of SsangYong Motor's first electric vehicle 'E100,' unveiled in July last year.

[Source=SsangYong Motor]

Small and medium-sized parts suppliers have virtually agreed to the P-Plan, but some foreign parts companies may refuse. For example, last December, foreign parts companies such as BorgWarner Ochang (T/C assembly) and Continental Automotive (combimeter) expressed their intention to refuse supply to SsangYong Motor. Foreign banks may also oppose the capital reduction because they lent money on the condition that Mahindra maintains more than 51% of the shares.

Even if HAAH acquires SsangYong Motor, support from KDB and others is necessary for business normalization. SsangYong Motor disclosed that it recorded an operating loss of 425.3 billion KRW last year. In particular, SsangYong Motor's total capital last year was -62.2 billion KRW, with a capital erosion rate of 108.3%. Based on plans to sell SsangYong vehicles in the U.S., it is known that they plan to request support from the main creditor bank, KDB Industrial Bank. In addition, there are voices calling for urgent cash payments as part of government support measures to prevent the collapse of parts suppliers.

SsangYong Motor said, "We will do our best to expedite business normalization by securing new investors, launching various new vehicles, and exploring overseas sales channels, overcoming the COVID-19 situation."

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