Local EV consortium recommended as preferred bidder for SsangYong Motor

A South Korean consortium led by local electric carmaker Edison Motors Co. has been recommended as the preferred bidder to acquire SsangYong Motor Co., the company said Wednesday.

“SsangYong and its lead manager have recommended the Edison Motors consortium as the preferred bidder for the carmaker,” a SsangYong Motor spokesman said, citing a statement released from the Seoul Bankruptcy Court.

SsangYong and the court-appointed lead manager EY Hanyoung accounting firm plan to submit an official document for the selection of the Edison consortium for the debt-laden carmaker within this week, and the court will approve the preferred bidder, he said.

This file photo provided by Ssangyong Motor shows the main gate of its Pyeongtaek plant, 70 kilometers south of Seoul. (PHOTO NOT FOR SALE) (Yonhap)

In the follow-up steps, SsangYong and EY Hanyoung plan to sign a memorandum of understanding with the Edison consortium for the deal by the end of this month, the company said in a statement.

In November, the Edison consortium will conduct a two-week due diligence on SsangYong and then sign a deal to acquire the SUV-focused carmaker, the statement said.

It is estimated up to 1 trillion won (US$850 million) is needed to take over SsangYong.

In September, three bidders, which also included Los Angeles-based EV maker INDI EV, Inc., joined the auction to acquire SsangYong.

Edison Motors has said it will set up a special purpose company to raise 800 billion won to 1 trillion won to acquire SsangYong and increase capital starting next year by issuing new shares to achieve a turnaround within three to five years.

The electric bus and truck maker said it aims to transform the SUV-focused SsangYong into an EV-focused carmaker in the next decade in line with changes in the automobile market.

It plans to produce 10 new EV models, including the Smart S, by 2022, 20 by 2025 and 30 by 2030.

In April, SsangYong was placed under court receivership for the second time after undergoing the same process a decade earlier. Its Indian parent Mahindra & Mahindra Ltd. failed to attract an investor due to the prolonged COVID-19 pandemic and its worsening financial status.

Court receivership is one step short of bankruptcy in South Korea’s legal system. In receivership, the court will decide whether and how to revive the company.

China-based SAIC Motor Corp. acquired a 51 percent stake in SsangYong in 2004 but relinquished its control of the carmaker in 2009 in the wake of the 2008-09 global financial crisis.

In 2011, Mahindra acquired a 70 percent stake in SsangYong for 523 billion won and now holds a 74.65 percent stake in the carmaker.

In the January-August period, SsangYong’s sales fell 17 percent to 61,854 vehicles from 74,707 units a year earlier. Its lineup consists of the Tivoli, Korando, Rexton and Rexton Sports SUVs.

In self-help measures, SsangYong’s 4,700 employees began to take two-year unpaid leave in rotation on July 12 while accepting an extension of a cut in wages and suspended welfare benefits until June 2023.

The company also plans to sell its current Pyeongtaek plant, 70 kilometers south of Seoul, in three to five years and build a new factory to focus on electric vehicles in the same city.