Delayed Ssangyong Motor Acquisition... Pyeongtaek City "No Discussions with Edison on Site Development"

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] The contract signing for the acquisition of Ssangyong Motor by the Edison Motors Consortium is facing difficulties. Following the Industrial Bank of Korea, Pyeongtaek City also drew a line, stating that it has not consulted with Edison Motors regarding the development of the Ssangyong Motor site.

According to industry sources on the 28th, Edison Motors applied to the Seoul Bankruptcy Court on the 24th to extend the deadline for the contract and deposit payment. The court accepted this request and postponed the deadline for the investment contract between Edison and Ssangyong Motor to January 10 of next year.

The original deadline set by the court was the 27th of this month. However, since negotiations between both parties on specific acquisition conditions have not been finalized, more time is reportedly needed. Edison Motors and Ssangyong Motor initially agreed on an acquisition price of approximately 304.8 billion KRW, which is about 5.1 billion KRW less than the original amount. Edison Motors is said to want to include a clause in the contract that allows them to be involved in Ssangyong Motor’s business operations.

Industry insiders analyze that securing funding related to the acquisition amount and operational plans is the core reason for the delay in contract signing.

Initially, Edison Motors announced plans to borrow about 800 billion KRW?roughly half of the 1.6 trillion KRW acquisition and operational funds?using the Pyeongtaek factory site as collateral from the Industrial Bank of Korea. However, the bank stated, "Existing automakers are also investing trillions of won in electric vehicle businesses," and added, "Edison Motors’ electric vehicle business plan must undergo verification by a third party," effectively indicating that the loan would not be approved.

Subsequently, Edison Motors expressed intentions to change the Pyeongtaek factory site’s designation from industrial to residential use and to raise funds by building residential facilities such as apartments in cooperation with Pyeongtaek City. The current value of the Pyeongtaek factory site is estimated at around 900 billion KRW. However, with nearby facilities such as Samsung Electronics Pyeongtaek Campus, Pyeongtaek-Jecheon Expressway Songtan IC, and SRT Pyeongtaek Jije Station, the price is expected to more than double if the land use is changed in the future.

In response, Pyeongtaek City issued an official statement on the 28th expressing regret toward Edison Motors for reporting related matters without the city’s consent and put a brake on Edison Motors’ plans.

Pyeongtaek City further explained, "We have been aware of the hopes of Ssangyong Motor’s labor and management and citizens for corporate rehabilitation, and despite controversies over preferential treatment regarding factory relocation and site utilization, we made a difficult decision to support the relocation site development and current site development and promised active support. However, Ssangyong Motor has stated that discussions on relocating the Pyeongtaek factory and developing the current site are currently difficult until the acquiring company is confirmed."

They added, "We ask Edison Motors, the preferred bidder for acquisition, to refrain from causing confusion among local residents by reporting unnotarized matters about the development of the Ssangyong Motor Pyeongtaek factory site without discussions with the city. The development of the current site will be pursued fairly and transparently through sufficient opinion gathering involving local residents, experts, and citizen planning groups after the relocation site for the Pyeongtaek factory is decided."

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