Skip to content
  • KOSPI 3088.57 +75.62 +2.51%
  • KOSDAQ 932.75 +18.81 +2.06%
  • KOSPI200 421.33 +11.42 +2.79%
  • USD/KRW 1108.4 -1.80 -0.16%
  • JPY100/KRW 1,043.15 -5.15 -0.49%
  • EUR/KRW 1,349.86 -0.92 -0.07%
  • CNH/KRW 171.86 0.02 0.01%
View Market Snapshot


US auto startup set to buy 51% of Ssangyong Motor for $250 mn

Jan 29, 2021 (Gmt+09:00)

HAAH Automotive Holdings Inc., a US automobile distributor, is planning to inject $250 million into South Korea's Ssangyong Motor Co. to take a 51% stake in the cash-strapped carmaker, according to automobile industry sources on Jan. 29.

The US startup, founded in 2014, proposed the investment involving a capital write-down of Ssangyong as part of the latter's self-rescue plan. The SUV maker will submit the plan next month to the Seoul district court supervising the carmaker's restructuring.

Earlier this week, India’s Mahindra and Mahindra Ltd., with a 75% stake in the troubled carmaker, pulled out of negotiations to sell a controlling stake in Ssangyong to HAAH after failing to narrow the price gap. 

The self-rescue plan includes writing down Mahindra's stake through capital reduction and issuing new shares so that HAAH can acquire a 51% stake. Ssangyong informed its parts makers of the scheme on Thursday.

As a condition of the stake purchase, HAAH asked state-run Korea Development Bank (KDB) to pour the same amount of fresh money into Ssangyong as the main creditor.

The self-rescue plan requires approval from its creditors and creditor banks. In return for the proposed new capital injection, KDB demanded that Ssangyong’s unionized workers would not stage walkouts before the company swings to a profit and that bilateral agreements signed between the labor union and the employer would remain in effect for three years.

Meanwhile, the South Korean government is expected to weigh in to help Ssangyong. At a ministerial meeting on Friday, liquidity support measures for the troubled carmaker were discussed, including rollovers of debts owed to parts suppliers and a temporary reprieve on debt repayments.

Last month, Ssangyong filed for court receivership after it defaulted on a loan repayment of about 60 billion won plus 60 million won in accrued interest to Bank of America and other foreign lenders. But the Seoul court granted a two-month reprieve to Ssangyong, allowing it to suspend debt repayments until the end of February to help it find a new investor.

In September of last year, Irvine, California-based HAAH offered to invest 300 billion won in Ssangyong to acquire a controlling stake.

In 2020, Ssangyong posted an operating loss of 423.5 billion won, falling into negative equity.

By Il-Gue Kim

Yeonhee Kim edited this article.

Comment 0