Following earlier reports a deal was close, a consortium led by South Korean electric vehicle (EV) manufacturer Edison Motors Company on Monday signed a final agreement to take over financially-troubled SUV maker Ssangyong Motors.
The 305bn won (US$256m) acquisition was approved earlier yesterday by a Seoul bankruptcy court.
Edison Motors said it paid 10% of the acquisition costs on Monday as agreed and it had also secured the remaining 90% of the investment, or KRW274bn, from other investors. The acquisition funds would go to repay creditors and to pay administration costs.
The final acquisition had been delayed after some issues arose following completion of due diligence in December, leading to the withdrawal of Keystone Private Equity Company from the consortium.
Ssangyong had been under court receivership since April 2021 after its Indian parent Mahindra & Mahindra failed to attract a new strategic investor in the company.
It would remain under administrative control until Edison submitted its rehabilitation plans to the court, due by 1 March 2022, and when the court satisfied with the initial debt settlement plans.
Edison, a domestic manufacturer of electric commercial vehicles, said it had also agreed to lend Ssangyong KRW50bn in operating capital to help it stay afloat during the recovery period.
Ssangyong global sales last year fell by 22% to 84,106 vehicles from 107,324 in 2020.
Edison also said it was considering setting up a special purpose company to raise up to KRW1trn to invest in Ssangyong in return for a stake in the automaker.
It aimed to transform Ssangyong into a focused manufacturer of EVs by the end of the decade with the introduction 20 new EV models by 2025 and 30 by 2030.
Edison said in a statement: “The possible options include a rights issue, foreign investment, loans in the form of operating capital and bond issuance.
“The company has no problems in raising necessary funds”.