SOUTH KOREA: Crunch-time for Ssangyong
A South Korean court is expected to rule tomorrow (6/2/09) on whether troubled Ssangyong Motor should stay in operation or have its assets liquidated.
Analysts say the court will likely rule in favour of Ssangyong's survival because of concerns over the impact of its failure on parts suppliers and employment in Korea.
The firm will therefore come under direct court control and SAIC will lose its control of the firm. A debt-for-equity deal would also be done with creditors in this scenario - which would play out along US Chapter 11 lines.
The alternative - a liquidation of assets - is thought to be SAIC's preferred option. But that's considered unlikely, partly because the assets would not fetch much.
Earlier this week Ssangyong said that it had resumed vehicle production as parts supplies normalised.
Ssangyong was forced to halt production in January when parts supplies dried up after it filed for bankruptcy protection.
Suppliers were concerned about payment.
Ssangyong, which is 51.3% owned by SAIC filed for receivership last monthg due to a liquidity crisis.