Creditors of South Korea’s SsangYong Motor could take months to rethink the sale of the carmaker after an initial deal with a Chinese firm fell apart, bank officials and analysts reportedly said on Monday.

According to Reuters, creditors are not expected to rush into a fresh deal, fearing their ability to extract a high price has weakened considerably after preferred bidder Blue Star failed to agree on a price.

The report said the South Korean carmaker has a market value of $US1 billion, but is wallowing in 1.32 trillion won ($US1.14 billion) of debt though its net profit jumped 84% last year to 589.6 billion won on cost cutting measures and strong sales.

Reuters noted that South Korean media had reported Blue Star was due to pay $600 million to $700 million for 50% of Ssangyong Motor, a stake currently valued at about $500 million.

“Creditors are likely to take their time – maybe until the end of this year – to reconsider their plans for Ssangyong Motor,” Chae Kyoung-sup, an auto analyst at Shinyoung Securities, told Reuters, adding: “The last thing they want is a repeat of what had happened to Daewoo Motor.”

In 2002, General Motors bought cash-strapped Daewoo Motor for $251 million, which analysts called a “giveaway” price after Ford Motor scuttled an earlier bid to take over Daewoo, the report said noting that another deal considered something of a fire sale was Samsung Motor, which was sold to Renault SA for 615 billion won ($531 million) in 2000.

“We are going to have some breathing space to rethink the whole sales plan,” an official at Ssangyong’s main creditor Chohung Bank told Reuters, adding: “We are in no rush and we don’t want to be blamed for selling the carmaker too cheap.”

The report said Ssangyong, which has the capacity to produce 180,000 vehicles a year with a workforce of 7,500, was put up for sale after creditors took control late in 1999, when its parent Daewoo Group was dismantled under a mountain of debt.

The selection of Chinese chemicals firm Blue Star, which also runs a chain of more than 400 noodle restaurants and has a car repair arm, had raised eyebrows, particularly given the clutch of automotive household names it was competing against, Reuters said.

Creditors picked Blue Star ahead of fellow state-run firm, Shanghai Automotive Industry Corp (SAIC), which operates several carmaking ventures with GM across the country, the report added.

“China’s SAIC could be named as a new preferred bidder” if creditors opted to start talking again, Sohn Jongwon, analyst at Goodmorning Shinhan Securities, told Reuters. “SAIC has offered an even lower price than Blue Star. But SAIC may offer better opportunities for Ssangyong’s long-term growth,” he reportedly added.

Analysts reportedly said GM-linked SAIC was a better fit for Ssangyong and could help the Korean carmaker, which sells most of its vehicles at home, look abroad.

“We believe Ssangyong Motor’s share price is significantly undervalued. We also expect the impact of the foiled negotiation would be limited,” Sohn told Reuters.