Ssangyong Motor, Self-Rescue Plan Approved by Vote... "Will Expedite Completion of Rehabilitation Process" (Comprehensive)

[Asia Economy Reporter Ki-min Lee] The self-rescue plan of Ssangyong Motor, which is undergoing corporate rehabilitation procedures, was approved in a vote by union members. Ssangyong Motor plans to promptly complete the corporate rehabilitation process by actively starting the sale process based on the rehabilitation plan containing this self-rescue plan.

According to Ssangyong Motor and the Ssangyong Motor Labor Union on the 8th, out of 3,224 union members who participated in the vote on the 'Special Labor-Management Agreement for Business Normalization (Self-Rescue Plan)' conducted since the previous day, 1,681 voted in favor.

The main contents of the self-rescue plan include ▲ two years of unpaid leave ▲ extension of the current wage cuts and suspension of welfare benefits for two years ▲ an additional 20% wage cut for executives ▲ changing the collective agreement revision cycle from the current two years to three years ▲ efficient workforce management and production response ▲ pledge of no labor disputes ▲ additional sale of idle assets (4 locations), among others.

Additionally, from the perspective of efficient production and workforce management, the implementation of job transfers in response to market demand and no new hiring for natural attrition such as retirement will effectively achieve workforce restructuring and productivity improvement.

With the realization of Ssangyong Motor’s self-rescue plan, the urgent task of preparing the rehabilitation plan to be submitted to the court has also been addressed. Ssangyong Motor must submit the rehabilitation plan, based on the investigation report by Han Young Accounting Corporation and the self-rescue plan, to the Seoul Bankruptcy Court. Ssangyong Motor expects that including the self-rescue plan in the rehabilitation plan will result in the going-concern value being evaluated higher than the liquidation value.

Furthermore, with reduced fixed costs, funds can be concentrated on new vehicle development. Ssangyong Motor is currently preparing to produce its first electric vehicle E100 (project name) and a new mid-size sport utility vehicle (SUV) J100 (project name). Originally, the E100 was scheduled to be launched in the second quarter of this year but was postponed due to financial difficulties.

Jung Yong-won, the administrator of Ssangyong Motor, said, "Above all, to build a foundation for long-term survival, we plan to present a future business vision by reorganizing the current internal combustion engine vehicle-centered business structure into an eco-friendly vehicle-focused one through strategic alliances with global advanced companies in preparation for the eco-friendly future car era." He added, "We will explain this in detail to employees and strive to achieve that goal."

He continued, "This self-rescue plan is the minimum will to survive that the company declares internally and externally," emphasizing, "Based on the rehabilitation plan including the self-rescue plan, we will promptly complete mergers and acquisitions (M&A) to establish a long-term survival foundation for Ssangyong Motor."

Especially, unlike the factory occupation protest incident that occurred 12 years ago in 2009, the current situation presents a completely different image, giving the government a reason to support Ssangyong Motor. The Korea Development Bank, Ssangyong Motor’s main creditor bank, insists on seeing self-rescue efforts as a prerequisite for support.

Jung Il-kwon, chairman of the Ssangyong Motor Labor Union, said, "The self-rescue plan was carefully prepared to avoid repeating the pain of 2009," and added, "The labor union will do its best to stabilize employment and lay the foundation for the company’s future."

The trade creditor group also hopes that the rehabilitation of Ssangyong Motor will accelerate with the approval of the self-rescue plan. Choi Byung-hoon, secretary-general of the trade creditor group, said, "If Ssangyong Motor union members continue to cooperate with the self-rescue plan, the trade creditor group will also do its best to support Ssangyong Motor’s rehabilitation process and sale."

Meanwhile, Ssangyong Motor obtained court approval the previous day for the selection of the sale lead manager consortium composed of Han Young Accounting Corporation and the law firm Sejong, as well as for the promotion of M&A.

Starting from the 9th of this month, the sale process will begin with a kickoff meeting to discuss the sale schedule, and after a bidding announcement around the end of this month, the full-scale M&A process is expected to proceed.

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