Ssangyong bailout plan does not include parent company support: sources

SEOUL, Jan. 18 (Yonhap) -- The bailout program submitted by beleaguered Ssangyong
Motor Co. does not include fresh support from its main shareholder, court sources
said Sunday.
Industry sources and the Seoul Central District Court said the plan submitted by
the carmaker, which filed for court receivership on Jan. 9, does not mention any
proposal for an injection of funds by Shanghai Automotive Industry Corp. (SAIC).
The Chinese company bought Ssangyong for US$500 million in 2004 and currently
holds a 51 percent stake in the carmaker.
Observers see the lack of commitment by the Chinese parent company as sign that
it will not play a role in reviving Ssangyong. South Korean creditors have called
on SAIC to do its part first before they move to help the carmaker.
If the court accepts the application for receivership next month, SAIC will lose
its management control but retain its majority stake.
Ssangyong's union workers have accused SAIC of failing to take concrete measures
to improve the South Korean automaker's competitiveness, saying it was only
interested in acquiring Ssangyong's technology. Some local analysts speculate the
Chinese company may be trying to abandon Ssangyong to avoid footing the bill for
a costly bailout.
Ssangyong has a line-up is dominated by sport-utility vehicles, and it is the
smallest of South Korea's five automakers. It ran into serious trouble in
mid-2008 as oil prices skyrocketed, causing consumers to re-think buying vehicles
with low fuel economy.
Creditors have said that Ssangyong has about 38 billion won (US$28 million) in
cash -- an amount that will allow the carmaker to continue operations for just
one month. It postponed paying its employees' wages last month.
Ssangyong had debts amounting to 800 billion won at the end of last year, with
150 billion won due to mature in April, according to company officials.
The court, meanwhile, said parts suppliers that have provided audio systems and
rear-view cameras have petitioned the court to allow payment.
These companies, which are usually small businesses have said that if they do not
receive payment they may have to shut down. That would have serious repercussions
throughout the auto industry and the overall economy.
South Korea's economy will be hard-pressed to pull off 2 percent growth this
year, according to some think tanks.
yonngong@yna.co.kr
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