Ssangyong Motor Submits Rehabilitation Plan to Court... 1.75% Lower Repayment Rate Poses Variable

Includes shareholder rights change plan to ensure debt repayment plan and acquirer's equity ratio guarantee

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[Asia Economy Reporter Park Sun-mi] Ssangyong Motor has submitted a rehabilitation plan to the court, which includes a repayment plan for rehabilitation claims and a business normalization plan. The creditors' group plans to hold discussions soon regarding Ssangyong Motor's rehabilitation plan.

According to industry sources on the 28th, Ssangyong Motor submitted the rehabilitation plan to the Seoul Bankruptcy Court 10 months after starting corporate rehabilitation procedures in April last year. The plan reflects the investment contract with the Edison Motors consortium. It is known to include a repayment plan for rehabilitation claims using the acquisition payment of 304.9 billion KRW from the Edison Motors consortium, Ssangyong Motor's business normalization plan, and a shareholder rights modification plan to guarantee the acquirer's equity stake.

Ssangyong Motor plans to repay only 1.75% of approximately 547 billion KRW in rehabilitation claims in cash with 17 billion KRW, and convert 98.25% into equity. The remaining acquisition funds after repaying the rehabilitation claims will be used for acquisition procedure costs. Additionally, the controlling shareholder Mahindra's shares will be consolidated from 10 common shares with a face value of 5,000 KRW each into 1 share, and new shares will be issued at 1 share per 5,000 KRW of rehabilitation claims converted into equity, followed by a re-consolidation of 23 common shares including the new shares into 1 share. The Edison Motors consortium will secure approximately 91% of the equity.

Ssangyong Motor plans to negotiate with the acquirer and stakeholders on ways to improve the repayment rate of claims and prepare a revised plan before the creditors' meeting scheduled for April 1. At the creditors' meeting, approval from at least three-quarters of secured rehabilitation creditors, two-thirds of rehabilitation creditors, and half of the shareholders is required to obtain the court's final approval of the rehabilitation plan. However, if the creditors' group opposes the plan due to the low repayment rate of 1.75%, the rehabilitation plan will be rejected.

In fact, the trade creditors reportedly expressed disappointment with Ssangyong Motor's rehabilitation plan, citing the repayment rate as excessively low. The trade creditors plan to convene soon to devise countermeasures regarding Ssangyong Motor's rehabilitation plan and discuss future courses of action.

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