Ssangyong Motor Begins Search for New Owner... Letter of Intent Submission Open Until Next Month 30

[Asia Economy Reporter Ki-min Lee] Ssangyong Motor, which is undergoing corporate rehabilitation procedures, has announced a sale to find a new owner.

According to industry sources on the 28th, Ssangyong Motor and the sale lead manager EY Han Young Accounting Corporation issued an announcement for the acquisition and merger (M&A) of Ssangyong Motor, officially starting the sale process.

Ssangyong Motor will accept letters of intent and confidentiality agreements until the 30th of next month, and among the hopefuls who submit letters of intent and pass the screening, preliminary due diligence will be conducted between August 2 and 27. After receiving acquisition proposals and selecting a preferred negotiation partner, the main due diligence and investment contracts will proceed sequentially. Ssangyong Motor plans to attract external capital through a third-party allotment rights offering and corporate bond issuance.

Earlier, Ssangyong Motor explained to the labor union that it plans to select a preferred negotiation partner by the end of September and conduct price negotiations by the end of October. The specific schedule will be finalized after the progress of the sale and court approval. Ssangyong Motor, which is pursuing M&A before the approval of the rehabilitation plan, has applied to the court to extend the deadline for submitting the rehabilitation plan by two months until the 1st of next month. Pre-approval M&A is a method where the M&A is conducted before the court’s approval of the rehabilitation plan, investment contracts are signed, and the rehabilitation plan is prepared based on this. If Ssangyong Motor’s sale plan proceeds as scheduled, the submission of the rehabilitation plan is expected to be after the price negotiations end in late October.

Companies that have expressed acquisition intentions include HAAH Automotive, domestic electric bus manufacturer Edison Motors, electric vehicle company K-Pop Motors, and private equity firm Park Seokjeon & Company, as well as companies from the US and China, who are also expected to participate in the acquisition battle. However, in the industry, it was viewed that HAAH Automotive, having secured a North American distribution network, could lead Ssangyong Motor to profitability after acquisition, but it is known that the management situation is difficult as executives responsible for US sales strategies have recently resigned. Other acquisition candidates have raised doubts about their financial mobilization capabilities and acquisition intentions.

Additionally, some in the industry predict that the sale’s success is uncertain due to Ssangyong Motor’s unstable financial situation. As of the end of March, Ssangyong Motor had a capital erosion rate of 86.2%, with current liabilities exceeding current assets by 843.2 billion KRW. Moreover, the investigation committee, EY Han Young Accounting Corporation, recently reported to the court that the liquidation value of Ssangyong Motor is higher than its going concern value. It is known that the liquidation value of Ssangyong Motor is about 1 trillion KRW, while the going concern value, which considers future earnings if Ssangyong Motor continues, was estimated at around 600 billion KRW.

However, Ssangyong Motor stated that the conclusion of the investigation report indicating a higher liquidation value compared to the financial situation was virtually expected, and since it is already pursuing pre-approval M&A, it does not pay much attention to the investigation committee’s report. A Ssangyong Motor official said, "Since the rehabilitation process is already proceeding on the premise of M&A, it is important to quickly find a prospective acquirer, complete the M&A process, and submit the rehabilitation plan." He added, "If that happens, the going concern value can be increased."

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