Ssangyong Motor P-Plan at a Dead End... San-eun's 'Empty-Handed' Support Inevitable

Ssangyong Motor Pushes P-Plan... Requests HAAH to Respond with Acquisition Intent by 20th
KDB to Decide on Funding After Reviewing HAAH's Investment Decision and Business Plan
Chairman Lee Dong-geol: "We Must Let Go of Everything Unnecessary and Proceed Lightly"

[Image source=Yonhap News]

[Asia Economy Reporters Sunmi Park and Gimin Lee] The Industrial Bank of Korea (IBK), the main creditor of SsangYong Motor, has clearly stated that it is impossible to provide separate financial support that would help with investment decisions. Although SsangYong Motor is pushing forward with the P-Plan (Preliminary Rehabilitation Plan) by requesting potential investor HAAH Automotive to express their investment intentions by the 20th, there are expectations that investment will not be easy contrary to hopes.

According to industry sources on the 17th, SsangYong Motor plans to proceed steadily according to the P-Plan schedule it has prepared, as it has received approval from the Reserve Bank of India (RBI) for the reduction of shares held by the major shareholder Mahindra.

On the 8th, SsangYong Motor submitted to the Seoul Bankruptcy Court the confirmation of payment for the approximately 140 million KRW required to initiate rehabilitation procedures and the deposit payment certificate. According to the Rehabilitation Act, the deposit applies to both general rehabilitation and the P-Plan, but since SsangYong has been preparing the P-Plan, it intends to proceed with the P-Plan procedure rather than general rehabilitation. Recently, SsangYong also requested HAAH to respond by the 20th regarding their intention to acquire. Considering that the 20th falls on a weekend, HAAH is expected to notify SsangYong of their investment possibility by the 22nd.

However, the industry is skeptical about the possibility of SsangYong and HAAH signing an investment contract. Since SsangYong is still large in scale and requires high costs for normalization, it is believed that without IBK’s financial support, HAAH will find it difficult to make an investment decision hastily. HAAH’s request for approximately 250 billion KRW in new funding from IBK is for this reason. On the other hand, IBK’s stance is that before SsangYong knocks on the door for financial support, it is urgent to make efforts through tight restructuring to secure a final investment decision from HAAH.

What is the possibility of IBK providing financial support to SsangYong Motor?

Lee Dong-geol, chairman of IBK, recently stated regarding the possibility of financial support for SsangYong Motor, "HAAH must make an investment decision, and after submitting a business plan, IBK is willing to provide some loan support only if the business feasibility is deemed reasonable." He added, "To lead HAAH to make an investment decision, SsangYong must be prepared to discard everything unnecessary and proceed lightly," emphasizing the need for prior restructuring.

IBK judges that the process of persuading HAAH is not going smoothly because restructuring or wage cuts have not been implemented at SsangYong, and in the worst case, they are considering court receivership. Chairman Lee’s remarks that if SsangYong cannot be saved, it must be liquidated to find a way to save it are interpreted as implying the possibility of SsangYong entering court receivership due to HAAH’s withdrawal of investment.

There is also talk of the possibility of financial support for SsangYong through the use of the Industrial Stabilization Fund (ISF), but even financial authorities, who are reviewing extensions of the application deadline and easing of application requirements for the ISF, hold the position that SsangYong cannot be considered a company temporarily suffering due to COVID-19 and thus is not eligible for support. A senior financial official stated, "Even if the conditions for ISF support are expanded, it will be difficult to connect it to support for SsangYong."

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