Ssangyong Motor Faces Court Receivership and Delisting Threat... HAAH Does Not Respond to Investment Intentions

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] HAAH Automotive, a potential investor in Ssangyong Motor, has not submitted the Letter of Intent (LOI) by the deadline set by the court. As a result, the risk of Ssangyong Motor entering court receivership is intensifying.

According to industry sources on the 1st, Ssangyong Motor had not received the LOI from HAAH as of 3 PM that day. Previously, the Seoul Bankruptcy Court had ordered Ssangyong Motor to submit HAAH Automotive’s LOI by the correction order deadline of the 31st of last month, and Ssangyong Motor conveyed this requirement to HAAH Automotive.

Considering the local time in the United States, Ssangyong Motor had planned to receive the LOI from HAAH by the morning of this month at the latest, review its contents, and then submit it to the court. However, HAAH ultimately did not send the LOI. Consequently, Ssangyong Motor is reported to have submitted a correction report to the court excluding the LOI.

HAAH is known to have a clear intention to acquire but is facing difficulties in persuading investors. Investors reportedly find the public interest bonds worth 370 billion KRW burdensome and are reviewing Ssangyong Motor’s rehabilitation plan. HAAH’s strategic investor (SI) and financial investors (FI) are said to be one from Canada and two from the Middle East, respectively, but some rumors suggest that certain investors have withdrawn their investment intentions.

As HAAH’s investment decision is delayed, concerns over Ssangyong Motor’s court receivership and delisting are growing. However, the court is not expected to immediately proceed with the court receivership process. A court official stated, "Although the correction order deadline has passed, the court will review the matter before deciding on entering court receivership, so the process will not proceed immediately." Following the rehabilitation law procedures, the court intends to examine the contents of Ssangyong Motor’s correction report, reassess whether the investment negotiations with HAAH are valid, and gather opinions from creditors and stakeholders.

Moreover, Ssangyong Motor is facing the risk of delisting after receiving a disclaimer of opinion on its 2020 fiscal year audit report from Samjong Accounting Corporation. In response, Ssangyong Motor announced the day before that it will conduct a revaluation of assets on 165 plots, including its headquarters in Pyeongtaek. Ssangyong Motor explained, "This is to reflect the actual value of assets in accordance with Korean International Financial Reporting Standards (K-IFRS)" and added, "It also aims to improve the financial structure through the effect of increasing assets and capital." As of the end of last year, the book value of these plots was 402.58 billion KRW. Ssangyong Motor’s capital impairment ratio was 111.8% based on consolidated financial statements at the end of last year, indicating a state of complete capital erosion.

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