SsangYong Motor buyout delayed as new investor turns indecisive

The fate of SsangYong Motor Co. remains in the limbo as talks with sole potential investor, California-based HAAH Automotive Holdings, fail to lead up to a definitive progress even as the automaker nears the break-or-make Feb. 28 deadline set by the bankruptcy court.

SsangYong Motor had expected to strike a deal with HAAH Automotive Holdings for new investment and file for a prepackaged bankruptcy next week.

But its potential investor has been dilly-dallying with extensive inspection over the Korean automaker’s production capabilities, weighing the management risk from SsangYong Motor’s recent factory shutdowns. The main Pyeongtaek plant was hardly open this month due to suppliers’ refusal of parts supply amid uncertainty of payment.

“HAAH Automotive is evaluating the suspended production situation and the operation plan for the next two years. It would give an answer after the review,” said an official from SsangYong.

SsangYong Motor is expected to reopen the Pyeongtaek plant from Mar. 2. Most of the suppliers who had refused to supply parts were persuaded to resume supply from next month, an industry source said.

The car importer is said to have strong will to buy SsangYong, but its investment partners are wary of SsangYong’s colossal debts and the recent output disruption, according to industry insiders.

HAAH Automotive reportedly has pooled in one strategic investor based in Canada, and two financial investors in the Middle East.

The M&A scheme reducing Mahindra & Mahindra’s ownership from 75 percent and putting HAAH Automotive Holdings as the largest shareholder in SsangYong requires an approval from the Reserve Bank of India (RBI). But the Indian central bank has yet to make a decision.

Last year, SsangYong Motor was given until Feb. 28 by a court to solve its default crisis before it is placed under court management.

As the grace period ends this month, SsangYong Motor plans to file for an extended reprieve with the court if it does not receive an answer from HAAH. Contingency plans against a buyout flop also are being prepared, according to sources.

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