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

Ssangyong Motor P-Plan Enforcement... Request for HAAH's Acquisition Intent Reply by 20th
KDB to Decide Funding After Reviewing HAAH's Investment Decision and Business Plan
Chairman Lee Dong-geol: "We Must Proceed Lightly, Letting Go of Everything to Discard"

[Image source=Yonhap News]

[Asia Economy Reporters Park Sun-mi and Lee Ki-min] The Korea Development Bank (KDB), the main creditor of SsangYong Motor, has clearly stated that it is impossible to provide separate financial support that would aid investment decisions. Although SsangYong Motor is pushing forward with the P-Plan (Pre-Packaged Rehabilitation Plan) by requesting the potential investor (HAAH Automotive) to express their investment intention by the 20th, there are observations that investment may not be easy contrary to expectations.

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 approximately 140 million KRW required for initiating rehabilitation procedures and a payment confirmation for the deposit to the Seoul Bankruptcy Court. 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, it is expected that HAAH will notify SsangYong of their investment possibility by the 22nd. It is reported that during recent meetings sharing the sale progress with officials from the Ministry of Trade, Industry and Energy and KDB, this was explained and HAAH stated they would submit a Letter of Intent (LOI) within this month.

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

Possibility of KDB’s Financial Support for SsangYong Motor?

Lee Dong-geol, Chairman of KDB, recently commented on the possibility of financial support for SsangYong Motor, stating, "HAAH must make an investment decision first, and if they submit a business plan afterward, KDB 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.

KDB believes that the process of persuading HAAH is not going smoothly because restructuring or wage cuts have not been implemented at SsangYong. In the worst-case scenario, they are considering court receivership. Chairman Lee’s statement that if SsangYong cannot be saved, liquidation should be considered to find a way to save it is interpreted as implying the possibility of court receivership due to HAAH’s withdrawal of investment.

There is also talk of financial support for SsangYong through the use of the Industrial Stabilization Fund (ISF), but even financial authorities, who are reviewing extensions of application deadlines and easing of application requirements for the ISF, maintain 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 is unlikely to lead to support for SsangYong."

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