ID :
74460
Sun, 08/09/2009 - 21:42
Auther :
Shortlink :
https://www.oananews.org//node/74460
The shortlink copeid
Creditor bank rejects Ssangyong's fund request for new car model
(ATTN: UPDATES with more details in paras 7-9; ADDS from with new information from
para 14)
SEOUL, Aug. 9 (Yonhap) -- The main creditor of Ssangyong Motor Co. has rejected a
request to fund the development of a new model that the beleaguered carmaker
claims is critical for its survival, financial sources said Sunday.
The carmaker, which was forced to halt operations for 77 days when hundreds of
unionized workers barricaded themselves inside the company's sole plant in
Pyeongtaek 70km south of Seoul, requested 150 billion won (US$122.5 million) to
develop and build a new compact sport utility vehicle called the C200.
The Korea Development Bank (KDB) notified Ssangyong managers it will provide
funds in the amount of 100 billion won for workers' severance pay and
restructuring, but not vehicle development, sources said.
"We are in the process of determining the extent and time for offering more
funds, with more detailed requests likely to be made this week to get a clearer
idea of how restructuring will take place," a KDB official who declined to be
identified said.
However, he said money for the new vehicle, which received some positive
reviews, is not under consideration at the moment as the ability of the carmaker
to survive is unclear.
"Just because labor and management have reached a compromise does not mean that
funds will be released," he pointed out, stressing that since Ssangyong is under
court receivership, any final call will have to be made by the court.
Ssangyong, the smallest carmaker in South Korea, entered bankruptcy protection in
February in return for implementing a turnaround plan calling for 36 percent of
its workforce, or 2,646 employees, to be cut.
Since then, some 1,670 workers left the company through voluntary retirement
plans, while the remaining 976 workers went on strike, which ended after a
compromise was reached after marathon negotiations.
Under Thursday's deal, the union agreed to accept a plan to eventually lay off 52
percent of the 976 workers, while the remaining 48 percent will be given unpaid
long-term leaves of absence.
Other creditors have hinted that Ssangyong will probably have to be sold to a new
investor or another carmaker and become a "new Ssangyong."
They claimed that because Ssangyong's woes stem from shrinking demand amid the
worldwide economic crisis and a lack of investment from its Chinese parent,
Shanghai Automotive Industry Corp., there may be a need for a fundamental change.
Reflecting such a possibility, government policymakers have said they are
seeking a prospective buyer for the company so a merger and acquisition deal can
take place. There has been speculation that two or three companies may be
interested in Ssangyong, although no details have been released.
In the first six months of this year, sales by Ssangyong, which has an annual
production capacity of 200,000 units, plunged 73.9 percent from the same period
last year to 13,020 units. The months-long strike also cost Ssangyong 316 billion
won in lost production.
Shanghai Automotive still owns a 51 percent stake in Ssangyong, but the Chinese
parent lost management control after the carmaker entered bankruptcy protection.
Related to the strike that resulted in violent clashes between workers and law
enforcement officers, the Gyeonggi Provincial Police Agency said earlier in the
day that it has requested 500 million won in damages from union leaders and
umbrella workers' groups that supported the strike.
It said the sum reflects costs incurred for injuries to 49 officers and damage to
police equipment like cars and radios.
"The suit will be made against Ssangyong labor union leaders and representatives
from Korea Confederation of Trade Unions and the Korean Metal Workers' Union," a
spokesperson said.
Police, meanwhile, have requested arrest warrants for 41 labor union leaders and
three umbrella workers' groups who led the strike or engaged in violent acts.
Besides these 44 people, police are questioning 52 people arrested after the
strike was called off, while releasing 362 people who were inside the plant but
were passive participants.
yonngong@yna.co.kr
(END)
para 14)
SEOUL, Aug. 9 (Yonhap) -- The main creditor of Ssangyong Motor Co. has rejected a
request to fund the development of a new model that the beleaguered carmaker
claims is critical for its survival, financial sources said Sunday.
The carmaker, which was forced to halt operations for 77 days when hundreds of
unionized workers barricaded themselves inside the company's sole plant in
Pyeongtaek 70km south of Seoul, requested 150 billion won (US$122.5 million) to
develop and build a new compact sport utility vehicle called the C200.
The Korea Development Bank (KDB) notified Ssangyong managers it will provide
funds in the amount of 100 billion won for workers' severance pay and
restructuring, but not vehicle development, sources said.
"We are in the process of determining the extent and time for offering more
funds, with more detailed requests likely to be made this week to get a clearer
idea of how restructuring will take place," a KDB official who declined to be
identified said.
However, he said money for the new vehicle, which received some positive
reviews, is not under consideration at the moment as the ability of the carmaker
to survive is unclear.
"Just because labor and management have reached a compromise does not mean that
funds will be released," he pointed out, stressing that since Ssangyong is under
court receivership, any final call will have to be made by the court.
Ssangyong, the smallest carmaker in South Korea, entered bankruptcy protection in
February in return for implementing a turnaround plan calling for 36 percent of
its workforce, or 2,646 employees, to be cut.
Since then, some 1,670 workers left the company through voluntary retirement
plans, while the remaining 976 workers went on strike, which ended after a
compromise was reached after marathon negotiations.
Under Thursday's deal, the union agreed to accept a plan to eventually lay off 52
percent of the 976 workers, while the remaining 48 percent will be given unpaid
long-term leaves of absence.
Other creditors have hinted that Ssangyong will probably have to be sold to a new
investor or another carmaker and become a "new Ssangyong."
They claimed that because Ssangyong's woes stem from shrinking demand amid the
worldwide economic crisis and a lack of investment from its Chinese parent,
Shanghai Automotive Industry Corp., there may be a need for a fundamental change.
Reflecting such a possibility, government policymakers have said they are
seeking a prospective buyer for the company so a merger and acquisition deal can
take place. There has been speculation that two or three companies may be
interested in Ssangyong, although no details have been released.
In the first six months of this year, sales by Ssangyong, which has an annual
production capacity of 200,000 units, plunged 73.9 percent from the same period
last year to 13,020 units. The months-long strike also cost Ssangyong 316 billion
won in lost production.
Shanghai Automotive still owns a 51 percent stake in Ssangyong, but the Chinese
parent lost management control after the carmaker entered bankruptcy protection.
Related to the strike that resulted in violent clashes between workers and law
enforcement officers, the Gyeonggi Provincial Police Agency said earlier in the
day that it has requested 500 million won in damages from union leaders and
umbrella workers' groups that supported the strike.
It said the sum reflects costs incurred for injuries to 49 officers and damage to
police equipment like cars and radios.
"The suit will be made against Ssangyong labor union leaders and representatives
from Korea Confederation of Trade Unions and the Korean Metal Workers' Union," a
spokesperson said.
Police, meanwhile, have requested arrest warrants for 41 labor union leaders and
three umbrella workers' groups who led the strike or engaged in violent acts.
Besides these 44 people, police are questioning 52 people arrested after the
strike was called off, while releasing 362 people who were inside the plant but
were passive participants.
yonngong@yna.co.kr
(END)
