KG, Cactus PE, Pavilion PE named new owners of Ssangyong Motor

A consortium led by the chemicals-to-steel conglomerate KG Group has been named the new owner of South Korea’s troubled sport utility vehicle maker Ssangyong Motor Co.

The Seoul Bankruptcy Court on Tuesday approved the automaker’s plan to pick the consortium as its new owner following an open bid where KG beat the contender, a consortium led by fashion business operator SBW Group.

The KG consortium, which includes two Seoul-based private equity firms, Cactus Private Equity and Pavilion Private Equity, is known to have offered about 900 billion won ($701 million), including operating capital of 600 billion won, to acquire Ssangyong Motor.

The consortium is expected to draw up a rehabilitation plan and present it to Ssangyong’s creditors for approval at a meeting scheduled for late August.

The court earlier said that the beleaguered SUV maker could face liquidation if it can’t find a buyer and close the deal by the court-set deadline of Oct. 15.

SYNERGY WITH KG STEEL

With the acquisition of Ssangyong Motor, KG Group expects to create synergy with KG Chemical Co., which works as the group’s holding company.

The conglomerate and Cactus PE jointly acquired KG Steel, formerly Dongbu Steel, in 2019. The company previously was one of key suppliers of car chassis and steel plates to Ssangyong Motor.

Last month, EY Hanyoung, the sale manager of the debt-laden carmaker, picked the KG-led consortium as the preferred buyer through a stalking-horse method.

A stalking-horse offer is a form of initial bid for a beleaguered or bankrupt company, which chooses an entity from a pool of bidders and designates it the preferred buyer. And then later, the sellers – EY Hanyoung and Ssangyong Motor – hold an open bid, where other bidders can join and become the final winner if they offer better terms, including a higher price, than the initial preferred buyer.

EY Hanyoung last week held an open bid, in which a consortium led by SBW Group participated to compete against the KG-Cactus-Pavilion consortium.

SBW Group, which owns Korea’s leading underwear maker Ssangbangwool Inc. and special-purpose vehicle maker Kanglim Co., formed a consortium with KH Group, subsidiaries of which include electronic lighting products maker KH Feelux Co., entertainment and talent management company iHQ Inc., also known as SidusHQ, and sound device maker KH Electron Co.

While the SBW consortium offered a higher bid, they didn’t win the deal as they failed to convince the sellers of their fundraising capability and normalization plans for the debt-laden carmaker.

The Ssangyong sales process follows the collapse of a similar deal with Edison Motors Co., a local electric bus maker, in March.

Edison was initially named the preferred buyer of Ssangyong last October, but was unable to clinch the final contract after failing to make the full payment by the deadline.

MAHINDRA GIVES UP

In 2011, Indian automaker Mahindra and Mahindra Ltd. took over Ssangyong by purchasing a 75% stake at 523 billion won from China-based SAIC Motor Corp.

However, Mahindra held back on further investment in Ssangyong as it faced its own declining sales in India. It put Ssangyong up for sale in 2020, virtually handing over management rights to the Seoul Bankruptcy Court.

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

The company plans to launch the all-new Torres SUV in the domestic market next month and export it to Chile and other countries later this year.

Trading of Ssangyong’s shares has been suspended since Dec. 21, 2020.

Write to Si-Eun Park and Han-Shin Park at seeker@hankyung.com
In-Soo Nam edited this article.