(ATTN: UPDATES with details in paras 4-5)
SEOUL, Jan. 10 (Yonhap) — A Seoul court on Monday approved a local consortium’s acquisition of SsangYong Motor Co., paving the way for the financially troubled carmaker to get back on track.
On the same day, the consortium led by electric carmaker Edison Motors Co. signed a final deal with SsangYong to take over the SUV-focused carmaker, according to the two companies.
SsangYong was placed under court receivership in April last year for the second time after undergoing the same process a decade earlier. Its Indian parent Mahindra & Mahindra Ltd. failed to attract an investor due to the COVID-19 pandemic and its worsening financial status.
Under the final agreement, Edison has agreed to acquire SsangYong for 304.8 billion won (US$254 million), and the acquisition money will all be spent to repay some of the carmaker’s debt to financial institutions, the two companies said in separate statements.
Edison said it has paid 10 percent of the acquisition money and secured the remaining 274.3 billion won.
Edison has also agreed to lend 50 billion won in operating capital to SsangYong to help it stay afloat amid the extended COVID-19 pandemic and low demand for its models.
The electric bus and truck maker is required to submit its rehabilitation plans for SsangYong to the court by March 1.
Edison has said it will set up a special purpose company to raise from 800 billion won to 1 trillion won starting this year to invest in a stake of SsangYong through various means to achieve a turnaround within three to five years.
“The possible options include a rights issue, foreign investments, loans in the form of operating capital, and bond issuance. The company has no problems in raising necessary funds,” Edison said.
Edison said it aims to transform SsangYong into an EV-focused carmaker in the next decade in line with changes in the automobile market.
It plans to produce 10 new EV models, including the Smart S, by 2022, 20 by 2025 and 30 by 2030.
SsangYong will remain under court receivership until the court approves Edison’s rehabilitation plans and SsangYong’s creditors accept the carmaker’s initial debt settlement plans, the spokesman said. SsangYong didn’t disclose the amount of overall debt.
“When all the demands are met, the court will be able to allow SsangYong to graduate from the court-led debt-rescheduling process,” he said.
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.
For the whole of 2021, its vehicle sales fell 22 percent to 84,106 units from 107,324 a year earlier amid the pandemic and chip shortages.
SsangYong’s lineup consists of the Tivoli, Korando, Rexton and Rexton Sports SUVs.