SsangYong Motor’s creditors to request rebidding

SsangYong Motor’s creditors will be requesting a rebidding of the merger and acquisition of the carmaker next Tuesday, according to SsangYong Motors.

The debt-laden SsangYong Motors confirmed that creditors had brought up the prospect of looking for a new owner instead of completing the M&A procedure with the bidder Edison Motors for a while.

South Korean electric carmaker Edison Motors had stepped closer to acquiring major stakes in SsangYong Motor in January after the two firms clinched a deal following the court’s approval.

But Edison was not able to bridge the gap with SsangYong’s creditors on the financially troubled SUV maker’s rehabilitation plan.

Commercial creditors of SsangYong Motor are strongly opposing the rehabilitation plan in which the carmaker proposed to repay only 1.75 percent of the total debt, worth 547 billion won ($554.5 million) in cash while converting the remaining bulk of 98.25 percent into equity.

The two carmakers had also been facing differences over management rights, the value of the takeover, and the scope of sharing technology, raising the possibility that the merger could die out.

Under the court-led sale procedure, SsangYong’s rehabilitation plan should be submitted by March 1.

The rehabilitation plan, which needs approval from two-thirds of creditors, currently faces opposition from 80 percent of them.

“Both parties agree that SsangYong must live for all of us to live. So we will continue to negotiate,” said an official from Edison Motors.

By Hong Yoo (yoohong@heraldcorp.com)