[Car Story] Will Ssangyong Motor Be Selected as a Preferred Partner?..."Companies Needed to Present Concrete Plans for Possibility"

"The longer the sale process is delayed, the more bidding companies' rosy plans reveal the 'Shanghai Auto nightmare'"

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] The conclusion regarding the document supplementation of the bidders for Ssangyong Motor will be decided around the 18th to 20th. If the level of financial proof and management plan documents resubmitted by these companies is still insufficient and not concrete, there is a possibility that the court may call for a re-bidding.

As the court's decision has been delayed due to incomplete documents from the bidding companies, criticism has arisen within and outside the industry that the bidders should have prepared substantial plans rather than presenting rosy plans for the post-acquisition of Ssangyong Motor.

According to the industry on the 17th, the Seoul Bankruptcy Court, which received supplementary documents from the main bidding participants EL B&T and the Edison Motors consortium through the Ssangyong Motor sale lead manager EY Han Young Accounting Corporation, plans to select one preferred negotiator and one preliminary negotiator around the 18th to 20th.

Originally, the court required the bidding companies to supplement the investment funds and management normalization proof documents submitted after the main bidding deadline by the end of last month. However, the court found even this insufficient and requested further supplementation by the 15th of this month.

Since Ssangyong Motor has repeatedly faced management difficulties after mergers and acquisitions (M&A), the court believes that if a company lacking financial and managerial capabilities acquires it, there is a high possibility of falling into insolvency again. Therefore, if the evidence does not meet the court's requirements this time as well, there is a possibility of re-bidding. A legal expert familiar with corporate rehabilitation said, "The court has already given the bidding companies two chances," adding, "If there are regulations regarding financial proof in the bidding guidelines, the court is likely to call for re-bidding after a failed bid."

Both companies entered the Ssangyong Motor acquisition battle with rosy plans, but as the M&A plan has been delayed, some recall the 'Shanghai Automotive nightmare.' Shanghai Automotive, which acquired Ssangyong Motor in October 2004, announced a mid-to-long-term management plan in January 2006, declaring an investment of 2 trillion won by 2010 to develop six new car models and five new engines. However, they practically failed to implement the plan properly, only taking technology and personnel before withdrawing, and Ssangyong Motor entered corporate rehabilitation proceedings again in 2009. An industry insider said, "Both Shanghai Automotive and Mahindra came with grand plans at the time of acquisition, but the reality is that Ssangyong Motor is undergoing corporate rehabilitation procedures," adding, "The court is aware of this, so bidders need to take a more realistic approach."

The bidders should have matched the acquisition funds and management plans of Ssangyong Motor to the level required by the court so that Ssangyong Motor and the creditors would not be anxious. EL B&T, which submitted a bid price in the 500 billion won range, plans to transfer its self-developed electric vehicle design and process technology and battery manufacturing technology to Ssangyong Motor to promote the development of new electric vehicles. Edison Motors, an electric bus company that submitted a bid of 200 billion won, also announced plans to release 10 electric vehicle models by next year and 30 models by 2030.

However, the industry still questions the feasibility. EL B&T has yet to publicly reveal any electric vehicles. Moreover, it is known that they do not hold patents related to electric vehicles or batteries, so it is uncertain whether they can provide Ssangyong Motor with their own electric vehicle platform. Regarding this, EL B&T stated, "We have developed our own dedicated electric vehicle platform technology and plan to disclose it in the future."

Even Edison Motors, which has sold electric buses so far, faces doubts about whether it has the technical capability to immediately release about 10 electric vehicle models next year. According to the Ministry of Land, Infrastructure and Transport, only Hyundai Motor and Kia Daewoo Bus have the capability to develop electric buses independently and have self-certification facilities. Other companies are classified as assemblers who purchase core parts rather than manufacturers.

Consistent funding is also crucial. Both companies, which formed consortia with private equity funds, claim they can raise the acquisition funds. However, EL B&T's capital and sales as of last year were about 3 billion won and 100 million won, respectively. Additionally, Cardinal One Motors, which partnered for the North American distribution network, faces uncertainty about whether it can restore the network to its previous level after its predecessor, HAAH Automotive, went bankrupt. Even if Edison Motors acquires Ssangyong Motor, if the proposed acquisition price is too low and there is no evidence of additional investment, it will be difficult to gain the trust of financial and commercial creditors.

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