SsangYong revival plans gain court approval

A South Korean Court in Seoul has approved SsangYong Motor Co.’s revival plans, clearing the way for the implementation of a three year programme designed to increase competitiveness, return to profitability and triple revenues over this year.

The Seoul Central District Court said SsangYong’s revival was proven to be worthier than its liquidation. The ruling now allows SsangYong to seek additional investment and financing, as well as forging ahead with its new model programme.

Judge Ko Young-han said the company had met all requirements set by the court for its self-rescue.  He said: “With supporters outnumbering opponents, we decided top give the green light to the plan to protect the interests of the majority.”

Ko added: “We also took into consideration the possible negative impact on the society and subcontractors if the self-rescue plan was rejected.”

Although some overseas creditors had opposed the plan, SsangYong had secured a landslide number of votes for the plan from shareholders, collateral-based and non-collateral bondholders and domestic creditors. The plan includes a write-off of 80 per cent of the shares held by Shanghai Auto Industry Corporation (SAIC) which will reduce its stake from 51 per cent to 11.2 per cent, and a conversion of 393 billion won of debt into new shares. Other shareholders will see their holdings written down at 3-to-1 initially, with a further write-down for all shareholders in January.

SsangYong had been granted court bankruptcy protection in February, and was then set back by an often violent strike which lasted 77 days. Operations can now be fully normalized with the management team free to make every effort to create a new viable company.

Paul Williams, managing director of SsangYong distributor Koelliker UK, said: “This is the news we have been waiting for. It’s been a very frustrating year with considerable uncertainty, but this decision means that SsangYong has a lifeline and I know that our Korean colleagues are determined to turn the company around. Most importantly, we can start planning properly for 2010, including the new C200 compact car.”

For the eighth month in succession, SsangYong increased UK sales in November over the same month last year. According to figures from the Society of Motor Manufacturers and Traders, 36 SsangYongs were registered last month – an 80 per cent improvement over November 2008.

This year to the end of November, SsangYong new passenger car registrations have hit 762, a 28.5 per cent improvement over 593 registrations in the same period last year. The South Korean make’s performance is all the more creditable because it is one of only 11 manufacturers to show a sales increase so far this year in a market that it still over 8 per cent down. 

Paul Williams, added: “Despite the problems in Korea, our dealer network has remained positive and loyal, and this is reflected in our sales performance in very difficult circumstances. Today’s court decision in Seoul means that we have turned a corner and we owe a big thanks to the dealers for toughing this out and seeing it through.”