SEOUL-- A South Korean consortium led by electric vehicle maker Edison Motors Co. and two others have submitted bids for SsangYong Motor Co., the deal's lead manager said Wednesday.
An official at EY Hanyoung accounting firm confirmed the Edison Motors-led consortium and two other bidders -- another local consortium led by EV firm Electrical Life Business and Technology (EL B&T), and Los Angeles-based EV maker INDI EV, Inc. -- joined the auction to acquire the financially-troubled carmaker.
The Edison consortium will set up a special purpose company to raise 800 billion won to 1 trillion won (US$684 million-$855 million) to acquire SsangYong and starting next year, increase capital by issuing new shares to achieve turnaround within three to five years, Edison Chairman Kang Young-kwon said in a statement.
Edison aims to transform the SUV-focused SsangYong into an EV-focused carmaker in the next decade in line with changes in the automobile market.
The electric bus and truck maker plans to produce 10 new EV models, including the Smart S, by 2022, 20 by 2025 and 30 by 2030, the chairman said.
That's why the Korea Corporate Governance Improvement (KCGI) fund joined the consortium that Edison Motors formed with Keystone Private Equity Co. and other financial investors to buy SsangYong in the auction.
KCGI Chief Executive Kang Sung-boo said last month the homegrown fund decided to join the consortium, as it agrees with the Edison chairman's vision.
EL B&T and INDI EV could not be reached for comments.
In July, 11 companies, including the Edison consortium, U.S.-based Cardinal One Motors, and SM Group, whose businesses range from construction to auto parts manufacturing, submitted letters of intent to take over SsangYong.
The SUV-focused carmaker and EY Hanyoung conducted preliminary due diligence on the companies that passed an initial screening process by August.
They aim to select a preferred bidder and a secondary preferred bidder by the end of September, conduct a two-week due diligence on the bidders in October and sign a deal in November.
It is estimated that up to 1 trillion won is needed to take over the debt-laden SsangYong.
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 SUV-focused carmaker.
KPMG Samjong Accounting Corp., the auditor of SsangYong, declined to give its opinion on the carmaker's annual financial statements for the year 2020.
SsangYong could be delisted if its accounting firm again refuses to offer an opinion on the company's annual performance for the following year after the one-year period.
In the January-August period, its sales fell 14 percent to 55,904 vehicles from 64,873 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.
Source: Yonhap News Agency