SsangYong receives three bids for stake sale, looks to get investor on board by November
According to sources, three companies which submitted bids by the deadline day yesterday, were a Korean consortium led by Edison Motors, a consortium led by Korean EV company EL B&T and US based EV company Indi EV. Korea based SM Group and US based Cardinal One Motors did not submit any bid to take over the ownership of SsangYong.
“Out of 11 investors that showed an intent to acquire SsangYong Motor, seven rolled out due diligence and three participated in the bidding,” the company said in a press release on Wednesday. A preferred bidder will be selected after carefully going over the companies’ funding as well as their capacity to lead stable growth of SsangYong Motor”, it added.
It is understood that SM Group pulled out of a bid on the premise that SsangYong was not ready to become a full EV company in the near future.
Ernst & Young Han Young, an auditing firm, is managing SsangYong Motor’s sales process. It will scrutinise the bids and select a preferred bidder by the end of the month, post which another round of due diligence is expected to tale place. If all the processes are completed, SsangYong is expected to get a new owner by November.
“The financial state of SsangYong could be one of the reasons as to why few final bids came in. This is due to the burden of SsangYong Motor’s public interest bonds worth 370 billion won. The decision by Mahindra to pull out of SsangYong in a pandemic year post confirming investments could be the primary reason why they have not been able to attract many buyers”, said a senior industry source.
It is no secret that a total of 1 trillion won is estimated to be needed to acquire SsangYong. The company has been posting net losses every quarter since Q4, 2016. Last year, it reported a net loss amounting to 504 billion won.
Edison is understood to have prepared an internal report which states that the acquisition of SsangYong would require 500 billion won by 2022. Of that, 200 billion won of the equity will be jointly invested by Edison Motors, members of the Korea Electric Vehicle Cooperative Association and Pyeongtaek City, where SsangYong’s plant is located. For the remaining 300 billion won, funds will be raised through financial investors.
Edison Motor chairman, Kang Young Kwon, believes that his company is the best firm that can help SsangYong get back on track again. This is because Edison has the expertise in manufacturing electric commercial vehicles that SsangYong could also make later on and restart its business.