HAAH Automotive, Edison Motors likely vie for SsangYong Motor

[Photo by Lee Seung-hwan]

California-based car importer HAAH Automotive Holdings and Korean electric bus maker Edison Motors are potential bidders likely to vie for a controlling stake in South Korea’s SsangYong Motor Co. by the deadline on Friday.

SsangYong Motor and its sale advisor EY Hanyoung Korea receive letters of intent until Friday.

Although no bids have been submitted, CEOs of HAAH and Edison Motors verbally expressed will to go through the bidding.

HAAH CEO Duke Hale in his recent online interview with Yonhap News said Cardinal One Motors, which he established with the purpose of focus on the takeover, is the optimal company to pursue the Korea car maker and will submit the LOI within the deadline.

SsangYong has to enter the U.S. for future growth and his company can help it with its experience in the global market, Hale added.

He praised SsangYong vehicles’ quality competitiveness and unveiled plans to import its SUVs and pickup trucks to North America.

Edison Motors also confirmed its intent.

In his phone interview with Yonhap News on Wednesday, its chairman & CEO Kang Young-kwon made it clear that the company has raised 270 billion won for financing from retail investors and will submit the LOI on Friday.

On top of that, unlisted Edison Motors earlier took over Kosdaq-listed micro EV maker Semisysco Co. to raise additional capital of about 250 billion won through rights offering and issuance of convertible bonds.

The company aims to help SsangYong become a global leader competing with dominant players like Tesla, Volkswagen and Toyota at the age of EVs with its technical capabilities in electric motor and battery management system.

Kang said his company would not cut any work force and instead hire more employees for R&D on EV upon the acquisition.

“Edison Motors is able to produce electric buses with a driving range of 500km. SsangYong Motor on the back of our technical expertise will be able to return to a profit and expect business normalization in just three years,” he added.

Despite their eagerness, funding capacity will be a question.

Apart from purchase of the shares from the current Indian parent Mahindra & Mahindra, the new investors would have to assume 390 billion won debt SsangYong Motor owed before the court protection and afford overdues and new capital of up to 1 trillion won.

Exactly who are the financial investors behind Cardinal One Motors and its capital strength are unknown. HAAH Automotive’s yearly revenue stopped at 23 billion won as of 2019.

Edison Motors is also poorly capitalized. Last year, company reported an operating profit of 2.7 billion won on sales of 89.7 billion won. SsangYong Motor’s revenue is 32 times larger than that.

“Various private equity funds and auto parts makers are suggesting investment. We’re confident that 270 billion won is enough for financing and is able to raise full 1 trillion won by partnering with financial investors,” said Kang.

SsangYong Motor plans to conduct due diligence with shortlisted contenders on August 2-27. Earlier, it announced plan to pick a preferred bidder by late September and proceed with price negotiation to complete the sales process by the end of October.

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