SsangYong Motor submits final rehabilitation and M&A plan, but creditors reject scheme

SsangYong Motor filed its restructuring plan with the Seoul court on Wednesday, July 27. The submission took place a month after the court approved a consortium as the final bidder for the acquisition of the South Korean automaker.

The Seoul Bankruptcy Court accepted SsangYong Motor's decision to pick the consortium led by the KG Group. As per Yonhap News Agency, the said consortium submitted a proposal worth ₩335.5 billion or around $256 million to acquire the car manufacturer, which has been under court receivership since April 2021 as Mahindra & Mahindra, its parent company, failed to secure investors.

The failure to attract investors made SsangYong Motor’s financial situation worst, and this happened amid the COVID-19 pandemic too. The company incurred debts that continued to pile up thus, it filed for bankruptcy and companies bid for its acquisition.

The company said that only 6.79% of its rehabilitation bonds are paid in cash. In any case, the submitted rehabilitation plan centers on the debt settlement scheme based on the KG Group consortium's acquisition payout. To some degree, the deal will also change the existing shareholders' rights for the KG consortium's controlling stake.

One of the consortium's rights issue plans is to raise ₩564.5 billion, which will be directed toward the automaker’s additional debt payment and operating capital. It was learned that SsangYong Motor has an outstanding obligation amounting to ₩818.6 billion. The company mostly owes money from its subcontractors and financial institutions.

Korea’s Post reported that Ssangyong Motor would continue to discuss ways to make the repayment rate of bonds better with the underwriters and stakeholders. The company hopes that this will be reflected in the revised rehabilitation plan that was forwarded before the assembly of interested parties.

“We are well aware that the repayment rate of the receivables in the rehabilitation plan does not meet the expectations of creditors and shareholders. This will provide an opportunity for mutual growth with creditors,” SsangYong Motor’s manager, Jeong Yong Won, said in a statement.

He added, “The contract volume for the new car Torres is currently 48,000 units and ss the business conditions are improving significantly, we will normalize the company as soon as possible and save the sacrifices of creditors and shareholders and we will repay your support.”

Meanwhile, according to Pulse News, SsangYong Motor’s submitted debt payment scheme was rejected by its creditors. It was reported that the company faced strong protests from them, a group that can veto the proposal due to the low redemption rate.