Court-led restructuring looms larger for SsangYong Motor

By Choi Kyong-ae

SEOUL, April 7 (Yonhap) -- Court-led restructuring for SsangYong Motor Co. is widely expected to begin this week as the sole potential investor didn't submit a letter of intent (LOI) to acquire the financially troubled carmaker, industry sources said Wednesday.

SsangYong Motor's Indian parent Mahindra & Mahindra Ltd. had been in talks with U.S. vehicle importer HAAH Automotive Holdings Inc. to sell its majority stake in the Korean unit as part of its global reorganization plan amid the COVID-19 pandemic.

The Seoul Bankruptcy Court demanded HAAH submit an LOI through SsangYong by March 31, but the U.S. company didn't send the documents.

In response, the court asked SsangYong's creditors, including the main creditor Korea Development Bank (KDB), to express their opinions on whether to begin the court-led debt rescheduling process for the carmaker.

"We have collected opinions from (SsangYong's) other creditor banks and have yet to deliver our view on the court receivership (to the court)," a KDB spokesman said by phone.

The court is widely expected to start the court-led restructuring process for SsangYong on Thursday or Friday after the mayoral by-elections in Seoul and Busan, the country's two biggest cities, on Wednesday.

This is the second time for SsangYong to place itself under court receivership after undergoing the same process a decade ago.

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.

Once the court receivership begins, SsangYong's survival depends on whether there is a new investor to acquire a "streamlined" SsangYong after debt settlement and other restructuring efforts, industry sources said.

On Wednesday, SsangYong Motor President and Chief Executive Yea Byung-tae stepped down from the post, taking responsibility for failing to attract investment from HAAH.

SsangYong filed for court receivership in December after failing to obtain approval for the rollover of 165 billion won (US$148 million) worth of loans from creditors. But it obtained a three-month suspension of its obligation to pay the debts due to the talks with HAAH.

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

In 2011, Mahindra acquired a 70 percent stake in SsangYong for 523 billion won and now holds a 74.65 percent stake in the SUV-focused carmaker.

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.

KPMG Samjong Accounting Corp., the auditor of SsangYong, declined to give its opinion on the carmaker's annual financial statements for the year 2020.

SsangYong could be delisted if its accounting firm again refuses to offer an opinion on the company's annual performance for the following year after the one-year period.

kyongae.choi@yna.co.kr
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