Court Approves Signing of MOU for M&A Between Ssangyong Motor and Edison Consortium

by Yoo Jaehoon

Published 03 Nov.2021 17:32(KST)

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] Ssangyong Motor announced on the 3rd that it has obtained approval from the Seoul Bankruptcy Court to sign a Memorandum of Understanding (MOU) related to the merger and acquisition (M&A) with the Edison Motors consortium, which was selected as the preferred negotiation partner.

Accordingly, Ssangyong Motor granted the Edison Motors consortium exclusive priority negotiation rights. The negotiation rights will expire if an investment contract is not signed or if three months pass from this date. However, the negotiation period can be extended if approved by the court.

If the MOU loses its effect without an investment contract being signed, Ssangyong Motor can negotiate with other investors, and Edison Motors cannot raise objections through civil or criminal lawsuits.

Meanwhile, Edison Motors plans to conduct a detailed due diligence on Ssangyong Motor over the next two weeks. Based on this, the main contract will be signed, and the investment contract is expected to be finalized by the end of this month at the earliest. Once the main contract is signed, Ssangyong Motor will submit a rehabilitation plan to the court, including debt repayment and funding plans. Currently, Ssangyong Motor is known to have debts of about 700 billion KRW, including public claims.

To finalize the rehabilitation plan, the consent of the creditors must also be obtained. The rehabilitation plan, which includes the repayment rate of rehabilitation claims, must receive approval from at least two-thirds of the creditors at the stakeholders' meeting.