Exchange Grants Ssangyong Motor Improvement Period, Decision on Rehabilitation Approval Expected in October

원본보기 아이콘

[Asia Economy Reporter Lee Seon-ae] Korea Exchange is expected to grant Ssangyong Motor a "correction period." Since the deadline for the approval of Ssangyong Motor's rehabilitation plan is set for October 15, it is deemed appropriate to grant a correction period until a judgment can be made based on this.

According to the Exchange on the 25th, Ssangyong Motor can request a review on whether the improvement plan has been implemented by today under Article 19 of the Enforcement Rules of the Listing Regulations of the KOSPI Market. Ssangyong Motor plans to apply for the review by submitting the details of the implementation during the correction period along with expert opinions.

Ssangyong Motor faced delisting reasons after receiving a "disclaimer of opinion" from the auditor on its 2020 fiscal year financial statements, but was granted a correction period from April 25, 2021, to April 14 of this year. However, during the correction period, it failed to resolve delisting reasons such as attracting investors and improving financial structure. The rehabilitation plan was not approved due to Edison Motors' non-payment, failing to resolve the delisting reasons. The 2021 fiscal year also received a "disclaimer of opinion" due to uncertainty about going concern. This marks two consecutive years of "disclaimer of opinion." Accordingly, Ssangyong Motor submitted an objection letter to the Korea Exchange on the 21st regarding the delisting reasons arising from two consecutive years of disclaimer of opinion on business reports.

If Ssangyong Motor's review request is made, the Exchange will hold a KOSPI Market Listing Disclosure Committee meeting within 15 days from the date of receipt of the review request to jointly review the "delisting reasons due to auditor opinions for the 2020 and 2021 fiscal years" and decide on the implementation of the improvement plan and delisting.

This is a joint review due to delisting reasons occurring for two consecutive years. The schedule is expected to be by May 17. The market expects the Exchange to decide to grant a correction period. Generally, if there is an important matter affecting the substantive examination of the company (such as approval of the rehabilitation plan), it is common to grant a correction period rather than delisting until a clear judgment can be made. Although the Exchange is reserved in its statements, a market insider familiar with the Exchange hinted, "Since it is most important for the company to survive, a correction period will be granted at least until October to make this judgment."

The Exchange can grant an additional correction period within one year after the Listing Disclosure Committee's review of delisting. If the delisting procedure proceeds without extending the correction period, Ssangyong Motor's market capitalization of approximately 415.1 billion KRW and a significant portion of shares held by 50,000 small shareholders will become worthless. Jobs of 200,000 workers, including those in related parts suppliers connected to Ssangyong Motor, will also be threatened. Given the considerable market impact of delisting, it is expected that the Exchange will not take reckless measures.

Ssangyong Motor is confident that it can resolve the capital erosion, which is a delisting reason, if the resale process proceeds normally. The goal is to complete all procedures by mid-October, the deadline for approval of the rehabilitation plan. Currently, the acquisition battle for Ssangyong Motor has narrowed down to four parties, including KG Group, Ssangbangwool, Billion Private Equity (PE), and ELB&T, who have submitted letters of intent.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.