Edison Motors, SsangYong file for court approval for final M&A deal

[Graphics by Song Ji-yoon]

South Korea’s Edison Motors-led consortium will file for a court approval to take over a controlling stake in bankrupt SsangYong Motor Co. by Monday deadline set by the bankruptcy court, but whether the M&A deal would be approved by creditors remains uncertain.

Edison Motors and SsangYong Motor ironed out differences for the terms of the M&A under the mediation of the bankruptcy court and will file for a court approval Monday. The finalization of a formal contract to the memorandum of understanding signed in Nov. 3 last year would take place Tuesday upon go-ahead by the court.

Shares of Kosdaq-listed Edison EV rose by daily permissible high of 30 percent to close at 28,400 won ($23.66) on Monday.

The signing was delayed from Dec. 27 to Jan. 10 due to differences over the management rights.

Edison Motors earlier conditioned SsangYong gets its approval for execution of initial working capital of 50 billion won ($41.7 million), which had been met with strong opposition for management interference before the deal is finalized. SsangYong instead agreed to “consult” with the spending.

SsangYong resisted Edison’s demand to see the carmaker’s roadmap in electric vehicles in fear of leak of confidential corporate information before acquisition, but yielded to share some of the information when requested.

The deal arranged by the bankruptcy court requires approval from creditors to be valid.

SsangYong Motor has been under court receivership since December 2020 after its Indian parent Mahindra & Mahindra since 2011 cut off funding and announced phased exit from South Korea. Main creditor and state lender Korea Development Bank has been questioning Edison’s financial ability to turn SsangYong Motor around and denied fresh loans.

The consortium would have to deliver at least 800 billion won to normalize SsangYong Motor. Its financial partner Keystone Private Equity recently abandoned the consortium.

Various options like rights offering and debt issuance are under review for additional financing after the M&A,” said an official from Edison Motors.

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