Court OKs new auction to sell SsangYong Motor

SEOUL, April 14 (Yonhap) -- A Seoul court on Thursday approved a new auction to sell debt-ridden SsangYong Motor Co. following its preferred bidder's payment failure for the carmaker last month.

In January, Edison Motors Co. signed a deal to acquire SsangYong for 304.8 billion won (US$249 million). But the deal collapsed as the electric bus maker failed to make the full payment by the March 25 deadline.

The Seoul Bankruptcy Court extended the deadline for SsangYong to find a new owner and submit a new restructuring plan by six months until Oct. 15.

SsangYong plans to adopt a stalking horse bid to select a preliminary bidder ahead of the new auction scheduled to begin in May, in which other bidders submit their prices, the company said in a statement.

If the bid by the company submitting the highest one is higher than the stalking horse's price in the auction, SsangYong will ask the stalking horse if it can pay the highest bidding price to buy the SUV-focused carmaker.

SsangYong aims to select a preferred bidder at the end of June, sign a deal in early July, submit its rehabilitation plan to the court in late July and obtain the court's approval for its restructuring plan in late August, it said.

SsangYong said it will advance the sale process as quickly as possible as there are multiple companies, which have shown interest in acquiring the carmaker.

Two companies recently submitted letters of intent (LOIs) to accounting firm EY Hanyoung, SsangYong's lead manager for the deal. They are underwear company Ssangbangwool Group and KG Group, whose business ranges from steel to chemicals.

Ssangbangwool said it has secured 450 billion won in funds for the takeover and will raise more money via a rights issue and other means.

Edison recently filed for a court injunction seeking to retain its position as the preferred bidder for SsangYong and asking the court to place the initial 10 percent down payment under provisional attachment.

In response to Edison's legal actions, SsangYong said the move is an obstruction of business and Edison can join the new auction if it has willingness and financial capability to acquire the carmaker.

SsangYong has been under court receivership since April 15, 2021, after its Indian parent Mahindra & Mahindra Ltd. failed to attract an investor amid the COVID-19 pandemic and its worsening financial status.

The latest deal's collapse marks yet another setback for SsangYong Motor.

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 global financial crisis.

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

SsangYong's lineup consists of the Tivoli, Korando, Rexton and Rexton Sports SUVs.

kyongae.choi@yna.co.kr
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