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| Korea Development Bank Chairman Lee Dong-gull speaks during an online press conference at its headquarters in Seoul, Monday. Courtesy of Korea Development Bank |
By Lee Min-hyung
SsangYong Motor should submit a “viable” revival plan to a possible investor before expecting any more financial support from the Korea Development Bank (KDB), the main creditor of the cash-strapped automaker, KDB Chairman Lee Dong-gull said Monday.
“SsangYong’s management and union are urged to keep in mind that their latest agreement is still not enough to attract investment from a potential buyer’s viewpoint, even if it is a step in the right direction,” Lee said during an online press conference.
The message came a few days after the automaker’s union and management reached a belated consensus over a restructuring plan. Under the agreement, SsangYong employees will take unpaid leave for two years from July, as part of the automaker’s measures to cut fixed costs for its revival. Executives at the company also agreed to accept an annual pay cut of 20 percent.
But Lee did not rate the plan that highly, saying there were “few sincere candidates” considering taking over the company.
“SsangYong should look at the matter only from an investor’s perspective,” Lee said. “The two-year unpaid leave does not appear to be attractive from the viewpoint of investors.”
“The KDB hopes SsangYong can find a possible buyer that will be responsible in helping the firm achieve sustainable growth, but this can only be possible when SsangYong has a viable business revival plan,” he added.
A group of companies are still expressing interest in taking over the automaker. These include U.S. auto retailer HAAH Automotive, and Edison Motors. SsangYong still wants to sign a deal with the American company, as other possible candidates are unlikely to spend billions of won to take over the company.
SsangYong plans to place a notice of tender for an acquisition sometime at the end of June.
“We cannot comment on the details of which companies have contacted SsangYong for a takeover, but my view is that SsangYong will face a tough road ahead,” Lee said.
SsangYong also pledged Monday to make concerted efforts to find a possible investor.
“We are going to complete corporate rehabilitation measures as early as possible by pushing for timely acquisition,” an official from the ailing automaker said. “The latest agreement will generate practical manpower restructuring effects without actually cutting the number of employees, he added.
SsangYong Motor turned began losing money in 2017 amid falling sales, and has since failed to achieve a rebound. The company reported 449.4 billion won in operating losses for 2020, widening its losing streak from the previous year when its deficit reached 281.9 billion won.
In December 2020, the company filed for court receivership and has since sought to find a new investor. HAAH was closest to reaching a deal, but remained hesitant over signing a contract due to the lingering financial burden after taking over SsangYong.
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