Korea Development Bank Pours 2.7 Trillion Won into Supporting Ssangyong Motor Suppliers

Extension of 222 Cases and 2 Trillion Won
Continuous Support While Monitoring Normalization

[Asia Economy Reporter Song Hwajeong] It has been revealed that the Korea Development Bank (KDB) provided 2.7 trillion KRW in support to Ssangyong Motor’s partner companies, which faced difficulties due to the overlap of Ssangyong Motor’s rehabilitation application and the COVID-19 pandemic.

According to the public institution management information disclosure system (Alio) on the 8th, KDB stated in the result report on corrective and handling requests for the 2021 National Assembly audit submitted last month that the support amount for Ssangyong Motor’s partner companies as of the end of April this year reached 2.7526 trillion KRW. This includes new loans of 613.3 billion KRW (45 cases), maturity extensions of 2.0294 trillion KRW (222 cases), and principal and interest repayment deferrals of 109.9 billion KRW (3 cases).

In last year’s National Assembly audit, corrective and handling requests for KDB included actively striving for the prompt normalization of Ssangyong Motor and reviewing measures to provide emergency operating funds secured by public claims that Ssangyong Motor’s partner companies hold against Ssangyong Motor. Since Ssangyong Motor’s rehabilitation application in December 2020, KDB has supported Ssangyong Motor’s partner companies through initiatives such as the “Cheer Up Korea Special Operating Fund.” The Cheer Up Korea Special Operating Fund was established to provide rapid liquidity to companies affected by COVID-19, with an operating scale of 5 trillion KRW. For small and medium-sized partner companies with major industry operations and large enterprise supply transaction records like Ssangyong Motor’s partners, a separate limit of 1.5 trillion KRW is operated. Interest rate benefits of up to 90 basis points (1bp = 0.01 percentage points) are provided.

Regarding the plan to provide emergency operating funds secured by public claims, KDB responded, “Credit decisions are made by comprehensively reviewing collateral as well as the company’s creditworthiness and business feasibility, so the effect of collateral reinforcement is limited.” It added, “The value of public claims as collateral can vary depending on the debtor’s asset size, and priority rights may be denied upon completion of rehabilitation procedures, so the practical benefit of collateral reinforcement is not significant.”

As Ssangyong Motor applied for rehabilitation procedures and faced difficulties in its sale, coupled with the COVID-19 crisis, about 400 Ssangyong Motor partner companies were also pushed to the brink of bankruptcy. In response, KDB actively supported these partner companies. KDB stated, “We will continue to monitor the normalization stage of Ssangyong Motor and the status of partner companies and maintain support for Ssangyong Motor’s partner companies going forward.”

Additionally, regarding the National Assembly audit request to make efforts to assist subcontractors affected by Daewoo Shipbuilding & Marine Engineering (DSME), KDB plans to handle the matter according to the outcome of ongoing lawsuits, considering that DSME is currently involved in administrative litigation with the Fair Trade Commission and damage claims lawsuits with partner companies related to subcontract disputes. KDB stated, “We have held about 10 meetings with executives in charge of DSME partner companies and the chairman of the subcontract damage countermeasure committee, as well as seven multilateral meetings. Regardless of DSME’s progress, we plan to continue efforts to facilitate smooth communication between the parties if necessary.”

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