SsangYong makes advance payment for prepackaged bankruptcy

[Photo by Lee Seung-hwan]

Troubled SsangYong Motor Co. has made advance payment of 140 million won ($123,806.15) required for a prepackaged or standard bankruptcy procedure to Seoul’s bankruptcy court, suggesting the beginning of a sale process for sole potential bidder HAAH Automotive Holdings.

The advance payment came after the court’s order early this month on the payment before the process under bankruptcy protection-related laws in Korea.

As SsangYong Motor has prepared for a prepackaged with a promise to strike a deal with HAAH Automotive Holdings for fresh investment within this month, a speedy turnaround process of the carmaker is expected in the market.

SsangYong Motor early this month vowed to sign a letter of intent with the California-based car importer before March 31 at a meeting with creditors and government agencies. It is a non-binding letter but can be used as the basis for a prepackage plan.

Under the plan, SsangYong Motor parent Mahindra & Mahindra’s 75 percent ownership will be reduced through capital reduction to make HAAH Automotive Holdings the new largest shareholder with a 51 percent controlling stake by purchasing new shares worth $250 million.

India’s central bank, The Reserve Bank of India, gave a nod to the plan last week.

Now the ball is back in the court of HAAH Automotive Holdings, which remains hesitant about signing the contract due to a hefty debt of about 370 billion won owed by SsangYong. It is also demanding additional capital injection by state lender Korea Development Bank, which is unlikely to accept the offer.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]