Monday, May 25, 2009

SsangYong Avoids Liquidation, Restructure Plans Tentatively Approved

CITING A RECENT assessment by Samil PricewaterhouseCoopers that SsangYong Motor would be worth more as a “going concern” than if it were liquidated, a South Korean court has given its approval for SsangYong to submit full restructuring plans by September.

Part of the plan is already in place, with the urgent need to reduce costs seeing SsangYong recently cut 37 percent of its workforce.


TMR reported in February that SsangYong had been granted court receivership to avoid bankruptcy following a 29 percent collapse in sales and a “liquidity crisis” after it failed then to secure new operating capital from its major creditor, the State-owned Korean Development Bank.

Similar to the United States’ Chapter 11 bankruptcy, South Korea’s court receivership gives a company some protection from creditors and breathing space to reorganise and restructure.

Speaking for the company’s UK interests, Paul Williams, Managing Director of distributor Koelliker UK Ltd. said: “This is the news we were hoping for and it means that SsangYong now has the lifeline it needs to implement major changes.

“The future will continue to be difficult, as it is throughout the auto industry, but the result should mean a leaner, much more efficient SsangYong.

“We already know that there will be a broader range of passenger cars using the latest petrol, diesel and hybrid technology, and the first – the C200 – will go into production later this year. Our dealers can now go forward with renewed confidence.”

TMR has contacted SsangYong’s Australian operations for comment on how this latest development will affect the brand in Australia, if at all, as well as whether we’ll see the SsangYong C200 down under. We will update this post when we know more.