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Creditors urge SsangYong Motor workers to cooperate for rehabilitation, turnaround

Finance 17:29 January 12, 2021

SEOUL, Jan. 12 (Yonhap) -- Unionized workers at SsangYong Motor Co. should cooperate in the automaker's court-led rehabilitation and business turnaround by not going on strike, a key condition for potential financial assistance, the chief of its main creditor bank said Tuesday.

The union has to fulfill two conditions -- having negotiations with the company over collective agreements every three years, not each year, and holding no strikes before turnaround, among others, Lee Dong-gull, chairman of the state-run Korea Development Bank (KDB), said in an online press conference.

"I often witnessed the unions of companies under restructuring stage a strike each year before the companies turn around. Such a self-destructive move won't be acceptable (to creditors)," Lee said.

He said the company won't receive a penny from its creditors unless its union meets the two requirements.

This photo taken on Nov. 19, 2020 shows KDB Chairman Lee Dong-gull speaking on the integration of Korean Air Lines Co. and Asiana Airlines Inc. during an online press conference. (PHOTO NOT FOR SALE) (Yonhap)

Last month, SsangYong Motor filed for court receivership as it struggles with snowballing debts amid the pandemic.

The SUV-focused carmaker asked main creditor KDB and other creditors to roll over the loans but failed to obtain approval from the lenders.

SsangYong also received a three-month suspension of its obligation to pay its debts, as it aims to find a new investor in the next three months before the court-led restructuring begins.

Its Indian parent firm Mahindra & Mahindra Ltd. is in the process to sell its majority stake in SsangYong as part of its global reorganization plan amid the COVID-19 pandemic.

Mahindra has said it does not have a plan to inject fresh capital into SsangYong and will give up its status as the biggest shareholder of the Korean unit if it finds a new investor.

Early this month, Mahindra Managing Director Pawan Goenka said the Indian carmaker expects to conclude the deal by Feb. 28.

He said Mahindra will hold a 30 percent stake or less in Ssangyong Motor if the deal goes smoothly and will also carry out a 25 percent capital reduction.

SsangYong logged net losses in all of the past 15 quarters through the third quarter of 2020 due to lack of new models and tougher competition with local rivals.

SsangYong is under court receivership for the second time, after undergoing the same process a decade ago.

China-based SAIC Motor Corp. acquired a 51 percent stake in SsangYong in 2004 but in 2009 relinquished its control of the carmaker in the wake of the economic downturn.

Court receivership is one step short of bankruptcy in South Korea's legal system. In receivership, the court will decide whether and how to revive the company.

Creditors urge SsangYong Motor workers to cooperate for rehabilitation, turnaround - 2


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