Court to decide fate of Ssangyong Motor next week

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SEOUL, Dec. 11 (Yonhap) -- The fate of Ssangyong Motor Co. was thrown into the
hands of a bankruptcy court Friday after the ailing automaker failed to win
enough support from creditors to push forward its turnaround plan, court
officials said.
With the plan failing to win enough backing from the creditors for the second
time, the Seoul Central District Court said it will make a decision on Thursday
whether to forcefully approve it or liquidate the carmaker.
The court's move has been widely expected as foreign bondholders of Ssangyong had
opposed the size of the capital writedown, while shareholders supported it.
The plan should win support from two-thirds of the creditors, but only 51.98
percent of them voted for it, according to the court officials.
Under the original plan submitted to the court last month, Ssangyong, majority
owned by China's Shanghai Automotive Industry Corp., would have cut the Chinese
parent's holdings to 11.2 percent from 51 percent and repay its 1.23 trillion won
(US$1.05 billion) in debt over the next 10 years.
The plan also called for Ssangyong to write down its debts at a ratio of three to
one.
As the creditors had voted against it on Nov. 6, Ssangyong slightly sweetened the
deal for them, and the revised proposal was submitted to the court this week.
If the court approves the turnaround plan, Ssangyong's court-appointed managers
say they will sell the carmaker's stake to foreign investors to survive.
Industry observers say the court would probably forcefully approve the plan to
give Ssangyong a chance to revive its business, given its importance in the local
economy.
"If Ssangyong Motor is liquidated, it will deal a severe blow against the local
economy," said an industry observer. "Given the circumstance, I think the court
would give a chance for survival to Ssangyong Motor."
Ssangyong became the nation's first major corporate victim of the global economic
crisis as the slump hit sales of new cars last year.
Some critics have accused Shanghai Automotive of failing to live up to its
investment plan and of stealing technology from Ssangyong, which specializes in
sport-utility vehicles.
Even if Ssangyong wins the court's approval on Thursday, doubts would persist
over the carmaker's viability, some analysts say.
In the first half of this year, Ssangyong's net losses reached 443 billion won.
Sales also plunged 66 percent from a year ago to 455 billion won, with operating
losses totaling 153 billion won.
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