SsangYong puts controlling stake up for auction | Economic Times

Cash-strapped Korean carmaker SsangYong Motor has put up a controlling stake for auction as it looks to bring on board a new investor to take charge of the company. SsangYong is currently undergoing a court receivership process after parent company, India’s Mahindra & Mahindra, failed to bring in a buyer over the last one year after announcing it would make no further investment in SsangYong.EY Hanyoung, the court appointed auditor in charge of the sale, said that as it receives letters of intent (LOI) till end July from potential buyers, it will start preliminary reviews of the bids from this August, and a preferred bidder will be announced in September, according to people in the know.The Korean auto major, which is 75% owned by Mahindra, is under court receivership since April after it failed to rollover loans worth $148 million from creditors such as the state-run Korea Development Bank (KDB) and several other banks.83966499“Auctioning the hard assets is the only option now for the company,” said Bahram Vakil, founding partner at AZB & Partners, and that the potential buyer will get the assets at a good price.An email sent to SsangYong seeking comment on the matter remained unanswered. Reports mention that local law firm, Shin & Kim, is also participating in the sale process in sync with EY Hanyoung, while SsangYong has apparently requested the Seoul Bankruptcy Court to postpone the submission date for its rehabilitation to early September. This is the second time that SsangYong has come under court receivership, the first being in 2009 when the company laid off more than 35% of its workforce, prior to Mahindra’s acquisition in 2011.US vehicle importer HAAH Automotive was the frontrunner as a strategic investor but did not officially submit its bid. HAAH Automotive spokesperson Chris Hosford said: “At this time there are no comments on your questions.”The value of the stake is likely to be fixed around $250 million, offered earlier by HAAH Automotive. With the increased push for electric vehicles globally, SsangYong is likely to see more EV bidders too in the fray. While HAAH Automotive continues to be in the game, others including electric bus maker Edison Motors, small electric vehicle maker K Pop Motors, and a consortium of EV makers along with a PE fund are also showing interest in picking up a stake.It must be seen whether SsangYong can find a new investor soon, considering its heavy debt and poor sales. Its sales dropped 19% to 1.07 lakh units last year and net loss jumped to 423.5 billion Korean won from 281.9 billion won for same period.Recently, workers at SsangYong agreed to accept restructuring measures that included the company’s proposal to furlough 1,681 of the 3,224 unionised workers, which works out to 52% of the workforce. The remaining staff will see a deduction in wages.