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SsangYong future seems assured

 

Unlike popular motoring news outlets, Outback Travel Australia didn’t share in the media enthusiasm for the proposed merger and acquisition (M&A) offer made by Korean electric bus maker, Edison, but a new buyer has now sealed the deal.

 

 

SsangYong Motor Company announced on 11th November 2022 that it had completed the repayment of the rehabilitation debt with funds resulting from its acquisition by the KG Group and has now completed its corporate rehabilitation procedure, some 18 months after the start of its rehabilitation in April 2021.

The company now plans to increase sales and quickly make a profit.

SsangYong appointed Kwak Jea-sun as its new chairman and Jeong Yong-won as CEO in September 2022 and steps were taken in October to stabilise management with further executive appointments and organisational reforms.

In July 2022, the KG Consortium and SsangYong’s labour and management signed a three-party special agreement, focusing on job security and long-term investment.

The KG Group also completed a second round of capital investment in October, to repay priority claims. After repaying its rehabilitation debts, it is accelerating improvement in the company’s financial structure.

The future growth of SsangYong will be based on the company’s move towards electrification, supported through additional capital funding from the KG Group.

The brand is also focusing on achieving growth through the successful international launch of its Torres SUV model.

Continuous investment and technology development for electric vehicles (EVs) is progressing, with the U100 scheduled for release next year.

SsangYong Motor officials commented:

“As a completely new and transformed business, we particularly reach out to our customers, to thank them for their loyalty and patience.”

 

 

The SsangYong saga

 

Indian automotive giant Mahindra had taken over the ailing SsangYong operation in 2011 and, after 10 years of ongoing losses, walked away from it in mid-2020.

South Korean company, Edison Motors, proposed a takeover of SsangYong Motor, but never looked like arranging finance and, when the acquisition price of A$300 million could not be paid before the March 25th, 2022 deadline, the proposed M&A deal collapsed.

Edison’s chances of encouraging other companies to share in its bid were hampered by the fact that investors, including private equity fund Keystone PE and SM Group, as well as SsangYong unions and commercial creditors, doubted Edison Motors’ financial power.

Edison was committed to converting SsangYong’s vehicle lineup to battery-electric power as soon as possible. However, the reality seen by the unions was different. 

Ssangyong Motor’s labour union said: “We have confirmed the fact that Edison Motors’ business plan, which says it can mass-produce electric vehicles with a small investment in a matter of months, is just an illusion”.

After the collapse of the Edison Motors bid, a battle kicked off in mid-April 2022 between three rival bidders: two medium-sized enterprises and a private equity firm, according to the Korean Herald.

KG Group, Ssangbangwool and Pavilion PE have submitted a letters of intent to acquire SsangYong Motor.

A new auction was scheduled for May and SsangYong Motor hoped to select a preferred bidder at the end of June 2022.

 

Plans on hold

 

 

SsangYong was hopeful of a successful bail-out when it announced, back in June 2021, provisional details for a new J100 and X200 wagon range, as well as new utes.

In addition, a deal to assemble the Rexton in Saudi Arabia was sealed in early 2022. SsangYong agreed to supply 169,000 kits to Saudi National Automobiles Manufacturing Company (SNAM), over a seven-year period.

However, SsangYong’s future was under cloud until new ownership of the company was worked out. Hopefully, the November 2022 ownership deal with KG guarantees a successful future for SsangYong.

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