[Chadamsup] Ssangyong Motor Seeks New Owner Again... Must Now End the Tragic History

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Hyun-seok] SsangYong Motor has decided to proceed with the resale process after numerous twists and turns. This is because the Seoul Bankruptcy Court approved the "pre-approval M&A re-promotion application, etc." on the 14th.

Among domestic automakers, none have experienced as turbulent a history as SsangYong. SsangYong Motor originated from the "Hadonghwan Automobile Workshop" in 1954 and changed its name to Dong-A Motor in 1977. In 1986, it joined the SsangYong Group and has maintained its current name since then.

The ownership changed several times thereafter. In 1998, it was acquired by the Daewoo Group, but after entering workout procedures in 1999, it was sold again in 2004 to China's Shanghai Automotive. In 2009, Shanghai Automotive withdrew, and the company entered corporate rehabilitation procedures. At that time, about 1,700 employees were laid off, leading to the "SsangYong Motor incident."

Later, in 2011, the company was acquired by India's Mahindra Group, and it seemed to stabilize. The compact sports utility vehicle (SUV) Tivoli was a hit, and the company even turned a profit in 2016. However, the cruel cycle of changing owners did not end. Due to worsening management conditions caused by COVID-19, Mahindra withdrew its investment plan for SsangYong Motor in April 2020 and declared its abandonment of management rights in June of the same year.

Ultimately, SsangYong Motor sought a new owner. Last April, while undergoing corporate rehabilitation procedures, it began searching for a buyer. Edison Motors, an electric bus company, emerged as a candidate. In October last year, SsangYong Motor selected the Edison Motors consortium as the preferred M&A negotiation partner. The main contract was signed in January this year.

Controversies arose during the acquisition process. Doubts about Edison Motors' financial capability kept surfacing. Additionally, the trade creditors and labor union expressed opposition. As a result, Edison Motors failed to pay the remaining acquisition amount of 274.3 billion KRW, leading to the cancellation of the investment contract.

Eventually, the situation returned to square one. SsangYong Motor has little time left. Since the deadline for the approval of the rehabilitation plan is October 15, all procedures must be completed within six months. Therefore, SsangYong Motor plans to proceed with the resale using the "stalking horse" method, signing a conditional investment contract with a prospective buyer and finalizing the acquirer through a public bidding process.

So far, candidates that have emerged include KG Group, Ssangbangwool Group, and the private equity fund Pavilion Private Equity (Pavilion PE). More may appear, but these are currently known to have submitted letters of intent (LOI). The preferred bidder is expected to be announced by mid-next month.

Even if SsangYong Motor welcomes a new owner, the hardships will not end. In an era where electric vehicles dominate, there are numerous areas requiring investment, such as developing dedicated platforms and improving processes. Nevertheless, the hope for success cannot be hidden. The SUVs SsangYong made were a dream for some when they were young. And SsangYong Motor has always risen like a phoenix from any adversity. For that reason, it is hoped that this time the cruel cycle of changing owners will finally be broken.

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