KG Group to Invest Additional 30 Billion KRW in Ssangyong Motor Acquisition

The Sanggeorae Creditors' Delegation Also Responds Positively

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] KG Group has decided to invest an additional 30 billion KRW in the acquisition of Ssangyong Motor. This amount is planned to be used for the repayment of rehabilitation claims. With the positive response from the trade creditors' representatives, the possibility of KG Group acquiring Ssangyong Motor has increased.

According to the automotive industry on the 11th, KG Group is known to plan an additional investment of 30 billion KRW on top of the existing acquisition price of 335.5 billion KRW.

KG Group's decision is intended to be used for the repayment of rehabilitation claims in order to gain the consent of rehabilitation creditors at the rehabilitation plan hearing and resolution meeting scheduled for the 26th.

Ssangyong Motor previously submitted a rehabilitation plan to the Seoul Bankruptcy Court that included a debt repayment plan using the acquisition funds from the KG consortium and a shareholder rights modification plan to guarantee the equity ratio of the final acquirer.

According to the rehabilitation plan, the total claims subject to repayment amount to approximately 818.6 billion KRW. Among these, about 237 billion KRW in rehabilitation secured claims and about 51.5 billion KRW in tax claims will be fully repaid according to relevant laws, but only a portion of the approximately 393.8 billion KRW in rehabilitation claims will be repaid.

Ssangyong Motor stated that 6.79% of the rehabilitation claims will be repaid in cash, and 93.21% will be converted into equity. Considering the value of the converted shares, the effective repayment rate of the rehabilitation claims is about 36.39%.

In response, the trade creditors' group, consisting of about 340 Ssangyong Motor partner companies, expressed that they cannot accept this rehabilitation claim repayment rate and announced their opposition to the rehabilitation plan.

Therefore, KG Group proposed the additional 30 billion KRW investment plan to the trade creditors' group and began persuading them. If the additional 30 billion KRW is paid, the cash repayment rate is estimated to increase to 13.92%, and the effective repayment rate to 41.2%.

The trade creditors' representatives held an internal meeting that afternoon and agreed to accept KG Group's proposal and support the rehabilitation plan.

The trade creditors' group plans to finalize their approval or disapproval of the rehabilitation plan through a video conference involving about 340 partner companies on the 16th of this month. Although the representatives have effectively accepted KG Group's proposal, if other partner companies oppose it, passing the rehabilitation plan may become difficult.

Ssangyong Motor is expected to submit a revised rehabilitation plan reflecting the additional investment to the court once the trade creditors' group's position is decided.

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