Chairman Dong-geol Lee Urges Ssangyong Motor to Secure Investment (Comprehensive)

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[Asia Economy Reporter Park Sun-mi] Lee Dong-geol, Chairman of the Korea Development Bank (KDB), met with the CEO and labor union chairman of Ssangyong Motor and urged them to negotiate with potential investor HAAH Automotive with a resolute determination.

According to KDB on the 18th, during the meeting with the CEO and labor union chairman of Ssangyong Motor the previous day, Chairman Lee emphasized that since the decision-making of the potential investor is being delayed, Ssangyong Motor should put everything aside with a "live or die" determination and proactively propose the best plan to attract investment.

Chairman Lee stated, "KDB will consider financial support for the normalization of Ssangyong Motor if the potential investor’s investment decision, funding capability, and the objective validity of the business plan are verified." He added, "The business plan for financial support review must be devised and presented first by Ssangyong Motor itself, as the main agent of management normalization," and urged, "For this, labor and management should unite and work together."

This meeting came as Ssangyong Motor requested HAAH to express its investment intention by the 20th and is pushing forward with the P-Plan (Preliminary Rehabilitation Plan). Ssangyong Motor plans to proceed steadily according to the P-Plan schedule prepared after receiving approval from the Reserve Bank of India (RBI) for the reduction of shares held by the major shareholder Mahindra.

However, contrary to expectations, there are views that HAAH’s investment decision will not be easy.

Since Ssangyong Motor’s scale remains large and normalization requires high costs, it is believed that without KDB’s financial support, HAAH will find it difficult to make a hasty investment decision. HAAH’s request for approximately 250 billion KRW in new funding from KDB is for this reason. On the other hand, KDB’s position is that the urgent task is for Ssangyong Motor to receive a final investment decision from HAAH through tight restructuring before knocking on the door for financial support.

Regarding the possibility of financial support for Ssangyong Motor, Chairman Lee maintains, "HAAH must make the investment decision first, and after submitting the business plan, KDB is willing to provide partial loans only if the business feasibility is deemed valid." He previously told reporters, "To induce an investment decision from HAAH, Ssangyong Motor must be prepared to discard everything unnecessary and proceed lightly," ordering prior restructuring.

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