SsangYong signs provisional contract with stalking-horse bidder KG consortium

[Photo by MK DB]

SsangYong Motor Co. has signed a provisional contract with KG Group-led consortium, its choice of stalking-horse bidder offering over $700 million in new capital, to raise hopes for a turnaround after a disappointment with earlier bidder.

The bankruptcy court and SsangYong Motor will move onto the next procedure of inviting the defeated contestants to challenge the stalking-horse bidder with better acquisition terms next week, according to sale advisor EY Hanyoung on Wednesday.

Among the defeated, Ssangbangwool (SBW) Group plans to challenge the stalking-horse bidder while filing a suit against the choice, accusing KG consortium of collusion.

“The company is clear of uncertainties by entering a provisional contract with KG Group-led consortium with management and funding ability. We will ready ourselves for normalization,” said SsangYong Motor.

KG consortium is believed to have offered 900 billion won ($706.6 million). KG will pool cash from its subsidiaries KG Mobility, KG ETS, KG Steel, KG Inicis, KG Mobilians and consortium partners Cactus PE and Pavilion PE without seeking extra or issuing debt.

The bidder vowed to keep payroll after acquisition. It aims to raise ownership to 90 percent by purchasing new shares from SsangYong Motor.

The Seoul Central District Court on Wednesday rejected an injunction filed by Edison Motors and dashed its hopes to save earlier deal.

SsangYong Motor plans to select a preferred bidder in June before signing a final contract in early July. It plans to hold a congregation in the end of August and seek creditor approval for its rehabilitation plan.

The carmaker expects new Torres sport utility vehicle due to be mass-produced from next month will help accelerate its business normalization.

KG shares strengthened. KG Mobilians shares gained 8.40 percent to 9,420 won in Seoul trading at 10:32 a.m. Thursday, and KG ETS up 2.02 percent at 17,700 won. KG Steel shares were trading 0.29 percent lower at 17,200 won.

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