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Local EV maker, 2 others submit bids for SsangYong Motor

16:15 September 15, 2021

SEOUL, Sept. 15 (Yonhap) -- A South Korean consortium led by electric vehicle maker Edison Motors Co. and two others have submitted bids for SsangYong Motor Co., the deal's lead manager said Wednesday.

An official at EY Hanyoung accounting firm confirmed the Edison Motors-led consortium and two other bidders joined the auction to acquire the financially-troubled carmaker.

The names of the two bidders were not immediately available.

Last month, the Korea Corporate Governance Improvement (KCGI) fund joined the consortium that Edison Motors formed with Keystone Private Equity Co. and two other financial investors to buy SsangYong in the auction.

KCGI Chief Executive Kang Sung-boo said last month that the fund decided to join the consortium as it agrees with Edison Chairman Kang Young-kwon's vision to transform SsangYong into an EV-focused carmaker in line with changes in the automobile market.

This file photo provided by Ssangyong Motor shows the main gate of its Pyeongtaek plant, 70 kilometers south of Seoul. (PHOTO NOT FOR SALE) (Yonhap)

In July, 11 companies, including the Edison consortium, U.S.-based Cardinal One Motors, and SM Group, whose businesses range from construction to auto parts manufacturing, submitted letters of intent to take over SsangYong.

The SUV-focused carmaker and EY Hanyoung conducted preliminary due diligence on the companies that passed an initial screening process by August. They aim to select a preferred bidder by the end of this month.

It is estimated that up to 1 trillion won (US$874 million) is needed to take over the debt-laden SsangYong.

In April, SsangYong was placed under court receivership for the second time after undergoing the same process a decade earlier. Its Indian parent Mahindra & Mahindra Ltd. failed to attract an investor due to the prolonged COVID-19 pandemic and its worsening financial status.

Court receivership is one step short of bankruptcy in South Korea's legal system. In receivership, the court will decide whether and how to revive the company.

China-based SAIC Motor Corp. acquired a 51 percent stake in SsangYong in 2004 but relinquished its control of the carmaker in 2009 in the wake of the 2008-09 global financial crisis.

In 2011, Mahindra acquired a 70 percent stake in SsangYong for 523 billion won and now holds a 74.65 percent stake in the SUV-focused carmaker.

KPMG Samjong Accounting Corp., the auditor of SsangYong, declined to give its opinion on the carmaker's annual financial statements for the year 2020.

SsangYong could be delisted if its accounting firm again refuses to offer an opinion on the company's annual performance for the following year after the one-year period.

In the January-August period, its sales fell 14 percent to 55,904 vehicles from 64,873 units a year earlier. Its lineup consists of the Tivoli, Korando, Rexton and Rexton Sports SUVs.

In self-help measures, SsangYong's 4,700 employees began to take two-year unpaid leave in rotation on July 12 while accepting an extension of a cut in wages and suspended welfare benefits until June 2023.

The company also plans to sell its current Pyeongtaek plant, 70 kilometers south of Seoul, in three to five years and build a new factory to focus on electric vehicles in the same city.

This file photo, provided by SsangYong Motor, shows the New Rexton Sports SUV. (PHOTO NOT FOR SALE) (Yonhap)

kyongae.choi@yna.co.kr
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