SsangYong Motor Company moves a step closer on the road to recovery as the Seoul Bankruptcy Court approved the automaker’s proposed restructuring plan, submitted under the auspices of the KG Group.
SsangYong has secured court approval for its proposed rehabilitation plan
Yonhap News Agency reports that the approval came after SsangYong’s creditor banks, subcontractors, and shareholders earlier agreed on the proposed debt settlement plan in a meeting presided over by the court.
Under the plan, SsangYong will pay 237 billion won (Php 9.94 billion) to its creditors. The company will also pay 13.97 percent of its existing 393.8 billion won (Php 16.5 billion) debt to subcontractors in cash, and 5.43 percent of the 136.3 billion won (Php 5.7 billion) it owes to parent company Mahindra & Mahindra Ltd., also in cash.
SsangYong will then convert the remaining debt into shares via a debt-to-equity swap, which is seen to lower Mahindra’s stake in the company to a single-digit figure from the current 74.65 percent.
“The approval came with 95.04 percent of agreement from our creditors, and 100 percent from secured creditors and shareholders,” SsangYong announced in a statement. “Now it allows SsangYong to gain a foothold to pave the way for normalization.”
The struggling automaker was saved through an offer tendered by South Korea's KG Group
“I truly appreciate all who supported us for the plan to be approved,” said SsangYong’s court-appointed manager Chung Yong Won. “We will exert all efforts to repay all of our creditors, stakeholders, and customers who believed us by making the company a sustainable one.”
SsangYong was rescued by the KG Group’s offer of 335.5 billion won (over Php 14 billion) for the automaker, which has been in court receivership since April 15, 2021. Mahindra has owned SsangYong since 2011 but cut funding nine years later over the latter’s 315.3 billion won (more than Php 13.2 billion) to creditors.
Electric vehicle company Edison Motors managed to successfully bid for ownership of SsangYong in late 2021, but the deal fell through in March 2022 following Edison’s failure to complete the payment for the acquisition.
SsangYong has received 60,000 orders for its new Torres midsize SUV
After a second round of bidding, the KG Mobility consortium led by KG Group emerged as SsangYong’s new owner. This brings corporate giants such as energy company KG Eco Technology Services (KG ETS), information technology management services firm KG Mobilians, foundry KG Steel, and credit card services company KG Inicis. Cactus Private Equity and Pavilion Private Equity are also included. A 47-percent stake of consortium owner KG ETS belongs to KG Chemical.
“It is with great pleasure that the court approves the rehabilitation plan and I sincerely appreciate all SsangYong employees who tired their best during the process,” said KG Chemical Chief Executive Officer Kwak Jae Sun. “KG will fully support SsangYong for its business normalization and regain trust in the market.”
Despite its financial struggles, SsangYong still managed to introduce its new Torres midsize sport utility vehicle in July 2022, garnering 60,000 orders. The model will make its world debut in November, followed by an electric version in the third quarter of 2023.
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