The Korean car maker is currently undergoing a court receivership process after parent company, India’s
& Mahindra, failed to bring in a buyer over the last one year after announcing it would make no further investment in SsangYong.
The court appointed manager and labour union have signed an MOU for the sale of the 8,50,000 sq metres plant site for 785 mn dollars. The company will now relocate to a new site with the support from local authorities, according to Korean reports.
The new plant will focus more on green vehicles and future technologies as part of its revival plan.
On June 28, SsangYong Motor put up a controlling stake for auction as it looks to bring on board a new investor to take charge of the company.
EY Han Young, the court appointed auditor in charge of the sale, said that as it receives Letters of Intent (LOI) till end July from potential buyers, it will start preliminary reviews of the bids from this August, and a preferred bidder will be announced in September.
The Korean auto major, which is 75% owned by Mahindra, failed to rollover loans worth $148 million from creditors such as the state-run Korea Development Bank (KDB) and several other banks.
Ssangyong is still under rehabilitation process and has to submit rehabilitation plan to the court. However, Ssangyong wants to make an M&A before submission of rehabilitation plan, said Seung Bum, Partner at Seoul based corporate law firm, Yulchon.
This is the second time that SsangYong has come under court receivership, the first being in 2009 when the company laid off more than 35% of its workforce, prior to Mahindra’s acquisition in 2011.
US vehicle importer HAAH Automotive was the front runner as a strategic investor but did not officially submit its bid.
The value of the stake is likely to be fixed around $250 million, offered earlier by HAAH Automotive. With the increased push for electric vehicles globally, SsangYong is likely to see more EV bidders too in the fray. While HAAH Automotive continues to be in the game, others including electric bus maker Edison Motors, small electric vehicle maker K Pop Motors, and a consortium of EV makers along with a PE fund are also showing interest in picking up a stake.
On April 15, the Seoul Bankruptcy Court approved the debt-rescheduling process for SsangYong Motor as HAAH Automotive, till then the front runner, did not submit a letter of intent (LOI) by the March 31 deadline.
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