SEOUL, June 28 (Yonhap) — SsangYong Motor Corp. opened an auction for its majority stake after its Indian parent Mahindra & Mahindra failed to find a new investor for the debt-laden automaker, its lead manager said Monday.
SsangYong has been under court receivership since April, as Mahindra failed to secure a buyer for its 75 percent stake in the Korean automaker amid the prolonged COVID-19 pandemic and its worsening financial status.
In a public notice of sale, EY Han Young, an accounting firm in charge of the sale process, said it will accept letters of intent from potential buyers until the end of July and conduct preliminary reviews on them in August.
Court-appointed administrator Chung Yong-won said last month that the company aims to select a preferred bidder in late September and enter price negotiations in October, but it remains unclear whether the automaker can find a new investor within the timeframe due to its heavy debt and weak sales.
The SUV-focused carmaker filed for court receivership with the Seoul Bankruptcy Court in December after defaulting on 165 billion-won (US$148 million) loan payment to the state-run Korea Development Bank (KDB) and several other banks.
SsangYong’s sales fell 19 percent to 107,416 vehicles last year, and its annual net loss widened to 423.5 billion won from 281.9 billion won from a year earlier due to sluggish sales.
U.S. vehicle importer HAAH Automotive Holdings Inc. had expressed interest in the preliminary process but did not officially submit its bid.
Other potential bidders include local electric bus maker Edison Motors and small electric vehicle maker K Pop Motors, a local private equity fund, according to reports.
As part of self-help measures, SsangYong said half of its 4,500 workers will go on unpaid leave for two years beginning next month and it will further sell assets to streamline its structure.
To dispel concerns over its viability, SsangYong said it has started domestic production of its first electric vehicle, the Korando Emotion, to target the European market in October.
SsangYong said it has also been developing an all-electric SUV with the goal of launching it next year to join the global automotive industry’s EV transition.
Last week, EY Han Young submitted an interim report to the bankruptcy court that estimated the present value of SsangYong’s liquidation at around 1 trillion won, which is greater than the value of continuance at 600 billion won, according to industry sources.
The court-appointed auditor is expected to submit a final report to the court Wednesday.
SsangYong said the report’s conclusion was widely expected as its current liabilities exceed the total capital by 843.2 billion won, stressing its restructuring efforts and EV transition plans to turn around its business.
“As SsangYong has been pushing for an M&A as part of the rehabilitation plan, it is more important to find an investor at an earlier date to end the court receivership and raise the corporate value,” a company spokesperson said.
Source: Yonhap News Agency