'Ssangyong Motors' Acquisition Declaration Sends 'Ssangbangwool' Soaring to Upper Limit

Ssangbangwool Declares Acquisition of Ssangyong Motor, Hits Upper Limit
Many Hurdles Ahead Including Raising Acquisition Funds

[Asia Economy Reporter Hwang Junho] Ssangbangwool, with a capital of 131.2 billion KRW, is set to acquire Ssangyong Motor in a deal worth 1 trillion KRW. While Edison EV, which previously attempted to acquire Ssangyong Motor, is embroiled in controversies over stock price manipulation allegations and a delisting threat due to a qualified audit opinion, Ssangbangwool's stock price hit the upper limit.

On the 1st, the Korea Exchange KOSDAQ Market Headquarters requested Gwanglim to disclose the facts and specific details regarding reports of the Ssangyong Motor acquisition. This inquiry followed Ssangbangwool Group's expression of acquisition intent to EY Han Young, the lead manager for Ssangyong Motor's sale, the previous day. Gwanglim, a subsidiary of Ssangbangwool, is the main entity for the Ssangyong Motor acquisition. Ssangbangwool stated, "After the failed acquisition of Eastar Jet, we have been reviewing various acquisition opportunities to diversify our business," adding, "We plan to submit a letter of intent (LOI) for the Ssangyong Motor acquisition by next week at the latest."

The acquisition consortium plans to keep various options open before finalizing. A related official said, "We are in the process of selecting candidates for the consortium with various possibilities in mind," and added, "We are also reviewing cases like Edison EV's and simultaneously working on risk management measures." Ssangbangwool has formed a task force team for the acquisition centered on Gwanglim, along with entertainment company IOK and optical parts manufacturer Nanos. Ssangbangwool began the acquisition process based on the judgment that there would be synergy effects with Gwanglim, a specialized vehicle manufacturer, upon acquiring Ssangyong Motor.

The acquisition funds will be secured through 120 billion KRW remaining after the failed Eastar Jet acquisition, along with financial investors (FIs). However, since Edison Motors failed in its acquisition attempt, the creditors' expectations may rise. Edison Motors had submitted a rehabilitation plan proposing to repay only 1.75% of approximately 547 billion KRW in rehabilitation bonds in cash and convert 98.25% into equity.

Another issue is that Edison Motors has not given up on its acquisition intentions. Edison Motors has filed for a provisional injunction to maintain contract status and a provisional seizure of the contract performance deposit, and if this leads to litigation, it could affect the acquisition battle.

Even if the acquisition proceeds, the rehabilitation of Ssangyong Motor, which has received qualified audit opinions for two consecutive years, is expected to face difficulties. According to the audit report by Samjong Accounting Corporation, Ssangyong Motor recorded an operating loss of 260.7 billion KRW and a net loss of 257.8 billion KRW as of the report date, with current liabilities exceeding current assets by 901.1 billion KRW and being in a state of complete capital erosion. Samjong Accounting Corporation pointed out, "The company is pursuing M&A before the approval of the rehabilitation plan as a measure to improve the financial structure and repay rehabilitation debts early," adding, "This situation raises significant doubts about the company's ability to continue as a going concern."

Meanwhile, Edison Motors is under investigation by financial authorities amid controversies involving stock price manipulation and allegations of embezzlement by major shareholders. Following the news of Ssangbangwool and Gwanglim's Ssangyong Motor acquisition, both stocks hit the upper limit early in the trading session.

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