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| Workers assemble engines at SsangYong Motor's Pyeongtaek plant in Gyeonggi Province. Courtesy of SsangYong Motor |
By Kim Yoo-chul
SsangYong Motor has signed a contract with preferred bidder Edison Motors to give the electric bus maker a 100 percent stake in the beleaguered automaker.
The agreement is subject to approval by the Seoul Bankruptcy Court, although officials say it is expected to get the green light. After receiving court authorization, Edison Motors will start two weeks of due diligence on SsangYong Motor, including checking its debts and assets.
As a deposit, Edison Motors wired 15.5 billion won, or 5 percent of its proposed acquisition price of 310 billion won, to SsangYong Motor's account late Tuesday.
Edison Motors also has to come up with around 1.62 trillion won to cover 700 billion won in SsangYong Motor's overdue payments as well as 800 billion won owed to the carmaker's main creditor, the Korea Development Bank (KDB). The state-run bank has said it will not provide any more financial aid to SsangYong.
SsangYong Motor and court-appointed sales advisor EY Hanyoung announced last month that an Edison Motors-led consortium had been chosen as the preferred bidder to take over the automaker. The consortium includes financial investors Korea Corporate Governance Improvement (KCGI), Keystone Capital and Edison Motors affiliate Semisysco.
Regarding detailed financing plans, Edison Motors said earlier that it plans to raise 310 billion won via a new share issuance and financial assistance from strategic investors. It will then proceed with a second share issuance to raise 530 billion won to cover operating costs. Edison Motors said it will seek to borrow 800 billion won from banks using SsangYong Motor's land and buildings as collateral.
Founded in 2015, Edison Motors builds electric buses and is developing electric commercial trucks. If all goes as planned, Edison Motors will start selling electric crossover vehicles and SUVs under the SsangYong brand.
Ssangyong Motor was acquired by Daewoo in 1997 and was sold to Chinese automaker SAIC in 2000. The ailing automaker was sold again to Mahindra & Mahindra in 2011. But the Indian carmaker sold its controlling stake to exit the Korean market.
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