Ssangyong Motor Signs Final Contract with Edison... Creditors Demand Clear Plans for New Car and Debt Repayment

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] The commercial creditors, who hold the key to Ssangyong Motor's graduation from the rehabilitation process, have once again demanded that Ssangyong Motor and the Edison Motors consortium present plans for new car launches and debt repayment.

According to industry and legal sources on the 11th, the Seoul Bankruptcy Court Rehabilitation Division 1 (Presiding Judge Kyung-hwan Seo) approved Ssangyong Motor's signing of the main contract with the preferred M&A negotiator, the Edison Motors consortium, the day before.

Edison Motors signed a memorandum of understanding (MOU) last December with an acquisition price of 304.8 billion KRW and paid 15.5 billion KRW. In the current main contract, they have completed an additional payment of 15 billion KRW. The Edison Motors consortium must pay the remaining 274.3 billion KRW to Ssangyong Motor at least five business days before the creditors' meeting. This move breaks industry expectations that the withdrawal of Keystone PE, a financial investor, would stall Edison Motors' acquisition of Ssangyong Motor, signaling their determination to push forward.

Although Ssangyong Motor has signed the main contract with Edison Motors, there are still many hurdles before rehabilitation is complete. The critical steps include the payment of the remaining acquisition funds, submission of a rehabilitation plan detailing repayment plans by creditor type and the reduction ratio of Ssangyong Motor's shares, holding the creditors' meeting, and obtaining court approval. To gain court approval, the rehabilitation plan must receive consent from at least three-quarters of secured creditors, two-thirds of rehabilitation creditors, and half of the shareholders at the creditors' meeting.

The commercial creditors believe that the development of new vehicles J100 and U100 (an electric vehicle based on J100), scheduled for release this year, must not be disrupted. This is to ensure that the launch of Ssangyong Motor's proprietary models, which suppliers have jointly invested in due to Edison Motors' electric vehicle plans, is not hindered. They also clearly state that repayment of public-interest claims to the commercial creditors by Ssangyong Motor must be carried out at a reasonable level for them to agree to the rehabilitation plan. A representative of the commercial creditors emphasized, "So far, the repayment rate for rehabilitation claims has been close to zero, so it is important to establish a plan on how to adjust and repay the claims going forward."

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