Ssangyong Motor sale collapses as Edison Motors fails to pay

The planned sale of Ssangyong Motor Co. to Edison Motors Co., a small South Korean electric bus maker, has broken down as Edison failed to make full payment by the deadline.

The aborted deal could nudge the debt-ridden sport utility vehicle maker toward liquidation if it fails to find another buyer soon, which seems to be hard as Ssangyong Motor has been making losses for years, analysts said.

Ssangyong said in a regulatory filing on Monday that the proposed stake sale to Edison Motors has been canceled as the buyer didn’t pay the balance by March 25 after paying 10% of the acquisition fee earlier.

In January, a consortium led by Edison Motors signed a contract to acquire Ssangyong Motor for 304.8 billion won ($249 million) following the Seoul Bankruptcy Court’s approval of the acquisition plan.

The consortium, virtually composed of Edison Motors and its fully-owned subsidiary Edison EV Co., earlier paid 30.5 billion won but failed to pay the remaining fee by last Friday.

Originally, the consortium included financial investors such as Seoul-based Keystone Private Equity and activist fund Korea Corporate Government Improvement Fund (KCGI), but the two major investors later withdrew from the bidding group.

The bidding group in October of last year was named the preferred buyer of Ssangyong Motor, beating other contenders, including electric vehicle and battery startup EL B&T.

In an early stage of sales talks, California-based HAAH Automotive also showed interest in the Korean SUV maker, but dropped its bid soon afterward.

EDISON’S FINANCING CAPABILITY DOUBTED

Edison Motors Chairman and Chief Executive Kang Young-kwon said last year if he succeeded in acquiring Ssangyong Motor, he would turn it into an electric vehicle brand.

Kang was virtually unheard of in the country’s automobile industry until Edison Motors stepped up to acquire the much bigger, but troubled SUV maker.

Unionized workers at Ssangyong Motor have opposed the troubled SUV maker’s sale to Edison, raising doubts over the smaller buyer’s financing capability.

Edison EV, which supplies electric buses to Seoul City, has posted operating losses over the past four years.

The stock, listed on the tech-heavy Kosdaq market, fell by the daily limit of 30% to 12,250 won in early Monday trade following the collapse of the Ssangyong deal.

Ssangyong Motor came under court receivership in December 2020 after amassing huge debt.

In 2004, China-based SAIC Motor Corp. acquired a 51% stake in Ssangyong, but relinquished its control of the carmaker in 2009 in the wake of the global financial crisis.

In 2011, Indian automaker Mahindra and Mahindra Ltd. took over Ssangyong by purchasing a 75% stake at 523 billion won. However, Mahindra held back on further investment in Ssangyong as it faces its own declining sales in India. It put Ssangyong up for sale in 2020, while virtually handing over the management right to Seoul Bankruptcy Court.

For the whole of 2021, Ssangyong’s vehicle sales fell 22% on year to 84,106 units amid the pandemic and automotive chip shortages.

Ssangyong's automobile lineup consists of the Tivoli, Korando, Rexton and Rexton Sports SUVs.

Write to Ji-Hye Min and Il-Gue Kim at spop@hankyung.com
In-Soo Nam edited this article.