SsangYong may head to bankruptcy court Fri with no reprieve from investor, creditor

[Photo by Lee Seung-hwan]

SsangYong Motor Co. denied of much-needed operating capital from a new investor or creditors is most likely headed straight to the bankruptcy court, possibly this week.

State-run Korea Development Bank (KDB) admitted on Tuesday discussions with SsangYong, its Indian parent and a new investor candidate have hit a snag.

“It does not seem there will be further discussions among SsangYong, KDB, Mahindra & Mahindra and HAAH Automotive Holding due to disagreements in the terms,” said KDB Vice Chairman Choi Dae-hyun in an online press conference on Tuesday.

SsangYong has hoped to wind up talks with the California-based car importer and file for a prepackaged bankruptcy by this Friday, a deadline the court has set to suspend its bankruptcy process.

The plan proposes to reduce Mahindra ownership from 75 percent to turn HAAH Automotive Holdings the largest shareholder by issuing new shares for a 51 percent ownership and management at $250 million.

A HAAH delegation has left the country without agreeing to prepackaged terms and demanded the state lender to shell out additional funding as a condition to its equity investment.

“This is not time for KDB to decide whether to offer additional funding to SsangYong as the potential investor has not yet made an investment decision,” Choi emphasized. “All decisions will be made on the agreed prepackage plan after careful evaluation on the execution progress and the validity of restructuring plan.”

He also noted that if the plan is found unviable, the troubled carmaker could face the standard bankruptcy procedure.

“SsangYong has yet to submit its detailed restructuring plan. KDB will decide after evaluating the sustainability of the plan it will draw up,” said Ahn Young-kyu, executive director of KDB.

KDB Chairman Lee Dong-gull has demanded unions promise not to strike until business normalizes and keep collective bargaining period to three years instead of renewing annually.

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