Ssangyong Motor "Liquidation value 982 billion KRW... Misunderstanding that it is higher than going concern value" rebuttal

[Asia Economy Reporter Ki-min Lee] Ssangyong Motor, which is undergoing corporate rehabilitation procedures, has rebutted the misunderstanding that its liquidation value being higher than its going concern value means something negative, stating that the liquidation value was assessed at 982 billion KRW.

On the 1st, Ssangyong Motor announced, "On the 30th of last month, the investigation committee EY Han Young Accounting Corporation and the court-appointed administrator of Ssangyong Motor each submitted their investigation report and administrator’s report to the Seoul Bankruptcy Court," adding, "According to the investigation committee’s report, Ssangyong Motor’s liquidation value is approximately 982 billion KRW."

Han Young Accounting Corporation reportedly submitted an investigation report to the Seoul Bankruptcy Court the previous day stating that Ssangyong Motor’s liquidation value is about 980 billion KRW, which is 360 billion KRW higher than the going concern value. This led to concerns about difficulties in Ssangyong Motor’s mergers and acquisitions (M&A) and the possibility of liquidation.

Ssangyong Motor rebutted by stating that the report includes additional scenarios where the going concern value is higher than the liquidation value. According to Ssangyong Motor, the going concern value in the investigation report was presented under two scenarios applying market forecasts from LMC Automotive and IHS Global Insight, respectively, as the basis for evaluation.

When applying LMC’s forecast, Ssangyong Motor’s going concern value is approximately 1.435 trillion KRW, exceeding the liquidation value by about 453 billion KRW. When applying IHS’s forecast, the going concern value is about 620 billion KRW, which is lower than the liquidation value. A Ssangyong Motor official explained, "The going concern value varied drastically depending on whether the domestic market size for Ssangyong’s core business, sports utility vehicles (SUVs), can maintain the current annual level of 700,000 units even after seven years." LMC expects the domestic SUV market to maintain its current level after seven years, while IHS anticipates a contraction of the domestic SUV market.

In particular, Ssangyong Motor holds the position that comparing going concern value and liquidation value is meaningless in the current situation where M&A is underway before court approval. Ssangyong Motor emphasized that the report pointed out, "Considering various factors such as social costs incurred during liquidation and the debtor’s potential, the corporate value may exceed the estimated figures, and if M&A is successful, synergies from the acquirer’s business plan could significantly increase corporate value."

Earlier, on the 29th of last month, when news about Han Young Accounting Corporation’s interim report surfaced, Ssangyong Motor rebutted, saying, "The investigation report submitted to the court does not reflect the business plans or synergy-related matters of the prospective acquirer in the event of M&A success," and added, "It is completely meaningless to mention M&A success or liquidation based on this report."

Administrator Jung Yong-won, regarding the progress of the rehabilitation procedure after submitting the report, stated, "We are currently in contact with multiple prospective buyers together with the sales agent Han Young Accounting Corporation, and we are confident in the success of the M&A," emphasizing, "In addition to M&A, we are reviewing and implementing various rehabilitation plans including self-rescue plans, so Ssangyong Motor will definitely achieve corporate normalization."

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