Ssangyong Motor to submit turnaround plan

By Kim Deok-hyun
SEOUL, Sept. 15 (Yonhap) -- Ssangyong Motor Co., the embattled South Korean
carmaker, was set to submit a plan to a Seoul court Tuesday on how it will repay
mountains of debt and slash its equity capital, company officials said.

The future of the carmaker remains uncertain as its main creditor, the state-run
Korea Development Bank (KDB), has refused to support it further, analysts say.
Ssangyong, South Korea's smallest carmaker, entered bankruptcy protection in
February after its largest shareholder, China's Shanghai Automotive Industry
Corp., abandoned the loss-making affiliate.
As part of restructuring efforts, Ssangyong had planned to cut 2,646 workers, or
36 percent of its workforce. About 1,700 of them left the company throughout
voluntary retirement packages, but the remaining workers occupied the carmaker's
only assembly plant for 77 days since mid-May to protest the massive job-cuts.
The sometimes violent occupation, which ended on Aug. 7, further darkened
Ssangyong's survival, costing the company 316 billion won (US$258.5 million) in
lost production.
Hit by the strike, Ssangyong's net loss widened to 177.1 billion won in the
April-June period. Sales for the same period plunged 66 percent to 221.7 billion
won.
Ssangyong is said to have total liabilities of 1.25 trillion won.
The turnaround plan is likely to cancel most of shares owned by the Chinese
parent, which owns 51 percent of Ssangyong, according to company officials.
Ssangyong will submit the plan as of around 11:30 a.m., they said.
On Monday, an official at KDB reiterated that the bank won't provide new loans
for Ssangyong to develop a new model, which is crucial for the carmaker's
long-term viability.
"There is no reason for creditor banks to offer funds for new-car development for
Ssangyong," the KDB official said.
Instead, Ssangyong should find private investors to raise fresh funds in the
process of bankruptcy protection, the official said.
The turnaround plan must be approved by creditors. The court will hold a meeting
with creditors on Nov. 6, but the date of voting has not yet been set, according
to Ssangyong officials.
(END)