SsangYong avoids bankruptcy
BY DAVID HASSALL | 6th Feb 2009
But while the court accepted SsangYong’s bankruptcy protection application and wrested control from its Chinese owner, analysts are not confident that the company can recover in the current economic climate after posting four loss-making quarters on plunging sales.
The Seoul Central District Court appointed former Hyundai president Lee Yoo-il to manage the company alongside SsangYong’s director of finance planning, Park Young Tae.
With the car industry suffering its worst downturn in decades and SsangYong being reliant on less fuel-efficient SUVs – the luxury Chairman is its only sedan – analysts say the company may be unable to trade out of trouble or attract sufficient investment.
Majority owner SAIC Motor Corp, one of China’s top Chinese automakers, with links to GM and VW, has shown little inclination to prop up the debt-burdened SsangYong operation, which filed for bankruptcy protection on January 9.
The court said its decision does not necessarily guarantee SsangYong’s survival.
“A revival requires the company’s own efforts, including strong restructuring, and the concession of creditors,” said the court in a statement. “If its own effort is not enough, the revival process will be abolished.” Judge Hong Junho said the court had considered the impact of SsangYong’s possible failure on parts suppliers and the overall job market in Asia’s fourth-largest economy.
Under court management, SAIC will relinquish control of SsangYong but maintain rights to some other SsangYong assets.
“SAIC cannot sell or transfer SsangYong’s assets and make other major management decisions, although the top stakeholder can sell its stake outside the market,” said the judge.
SAIC paid $US500 million ($A768 million) for 49 percent of SsangYong in 2004 and pumped in another $US45 million ($A69 million) late last year, but valued its 51 percent stake as of the end of November at $US271 million ($A416 million).
SsangYong shares have been suspended since January 12, when it filed for bankruptcy protection.
Ssangyong, which is South Korea’s smallest car-maker but its first big corporate casualty, employs 7100 workers and its 200-plus suppliers employ around 90,000 people.
It sold fewer than 100,000 vehicles globally last year, including only 1372 in Australia.