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Ssangyong files for bankruptcy protection
By Seonjin Cha |
January 10, 2009, Saturday
|
Print Edition
Print Edition
SSANGYONG Motor Co filed for bankruptcy protection in South Korea, ending SAIC Motor Corp's four-year management of the first overseas auto maker controlled by a Chinese company.
The car maker faces a "serious liquidity crisis" after the South Korean government and lenders failed to agree on a rescue plan, Pyeongtaek-based Ssangyong said in a statement yesterday. Two of its three most senior executives also left.
Ssangyong will cut salaries by as much as 30 percent over the next two years in an effort to survive after sales of its sport-utility vehicles plunged amid a global recession.
SAIC's parent paid US$500 million for 49 percent of Ssangyong in 2004.
"The main shareholder clearly thinks it won't be easy to turn Ssangyong around, even if it injects additional funds," said Park Hwa Jin, a Seoul-based analyst at Shinyoung Securities. "The key for the company's recovery is the economy, but for now, everything is extremely unclear." Park has a "neutral" rating on Ssangyong shares.
Choi Hyung Tak and Zhang Haitao, two of Ssangyong's three co-representative directors, departed their posts. Choi quit for personal reasons, while Zhang is moving to another role as part of an SAIC reshuffle, Ssangyong said in an e-mailed statement, without elaboration. There was no mention about the future of the third co-representative, Lan Qingsong.
Trading of Ssangyong's shares, down 77 percent in the past year, was halted.
The auto maker applied for court protection at the Seoul Central District Court yesterday after a board meeting failed to produce a turnaround plan, it said. The company had previously held talks with the government, banks and other parties.
The court will decide within a month whether it will accept the protection application or will proceed with insolvency processes, Judge Hong Jun Ho told Bloomberg News by phone. "The application for court receivership doesn't mean SAIC's withdrawal," Choi Sang Jin, director of Ssangyong's planning division, said. "SAIC will continue its role as a main shareholder."
SAIC, which now owns 51 percent of Ssangyong, will lose control of the auto maker under court receivership. The car maker, China's biggest, will work with Ssangyong on normalizing operations, it said in an e-mailed statement yesterday.
SAIC's stake in Ssangyong was valued at 1.85 billion yuan (US$271 million) at the end of November under Chinese accounting standards, the Shanghai-based auto maker said. The firm is still assessing the financial impact of the Ssangyong receivership on its accounts, it added.
Ssangyong has posted four straight quarterly losses because of slumping demand for SUVs, which account for about half of revenue.
The car maker faces a "serious liquidity crisis" after the South Korean government and lenders failed to agree on a rescue plan, Pyeongtaek-based Ssangyong said in a statement yesterday. Two of its three most senior executives also left.
Ssangyong will cut salaries by as much as 30 percent over the next two years in an effort to survive after sales of its sport-utility vehicles plunged amid a global recession.
SAIC's parent paid US$500 million for 49 percent of Ssangyong in 2004.
"The main shareholder clearly thinks it won't be easy to turn Ssangyong around, even if it injects additional funds," said Park Hwa Jin, a Seoul-based analyst at Shinyoung Securities. "The key for the company's recovery is the economy, but for now, everything is extremely unclear." Park has a "neutral" rating on Ssangyong shares.
Choi Hyung Tak and Zhang Haitao, two of Ssangyong's three co-representative directors, departed their posts. Choi quit for personal reasons, while Zhang is moving to another role as part of an SAIC reshuffle, Ssangyong said in an e-mailed statement, without elaboration. There was no mention about the future of the third co-representative, Lan Qingsong.
Trading of Ssangyong's shares, down 77 percent in the past year, was halted.
The auto maker applied for court protection at the Seoul Central District Court yesterday after a board meeting failed to produce a turnaround plan, it said. The company had previously held talks with the government, banks and other parties.
The court will decide within a month whether it will accept the protection application or will proceed with insolvency processes, Judge Hong Jun Ho told Bloomberg News by phone. "The application for court receivership doesn't mean SAIC's withdrawal," Choi Sang Jin, director of Ssangyong's planning division, said. "SAIC will continue its role as a main shareholder."
SAIC, which now owns 51 percent of Ssangyong, will lose control of the auto maker under court receivership. The car maker, China's biggest, will work with Ssangyong on normalizing operations, it said in an e-mailed statement yesterday.
SAIC's stake in Ssangyong was valued at 1.85 billion yuan (US$271 million) at the end of November under Chinese accounting standards, the Shanghai-based auto maker said. The firm is still assessing the financial impact of the Ssangyong receivership on its accounts, it added.
Ssangyong has posted four straight quarterly losses because of slumping demand for SUVs, which account for about half of revenue.
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