Ssangyong’s plants – including an engine plant in Changwon and its main plant in Pyeongtaek – have resumed operations following the dramatic ending of the Pyeongtaek siege last week.
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The Pyeongtaek plant has resumed the production of parts such as bonnets and doors and the automaker is expected to resume operations at all of its assembly and production lines as early as Wednesday (August 12).
However, the company’s troubles are far from over.
The Korea Herald newspaper notes that one of the most urgent issues Ssangyong must address is drawing up revival plans by Sept. 15.
For the revival plan to be approved, the carmaker must convince the court that the plans are feasible and that the continuation value of the firm is greater than the liquidation (of assets) value. The plan must also show that reimbursements will be made in the order of secured creditors, unsecured creditors and shareholders.
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By GlobalDataIn addition, the revival plans will have to show that the company is capable of absorbing the damage caused by the 77-day strike.
If the plans are accepted by the court, a conference of creditors and other concerned parties will be called within one to two months. If the plans are then rejected, the process of reviving Ssangyong may be terminated.
Although the report compiled by Samil PricewaterhouseCoopers indicated that the liquidated value of Ssangyong to be 389 billion won ($318 million) less than its continuation value, the values are based on assumptions that the restructuring process is completed and new loans are forthcoming from financial institutions.
However, the Korea Herald report said that it ‘appears unlikely’ that Ssangyong’s main creditor – the Korea Development Bank – will provide financial aid beyond what is required to fund the restructuring process.
According to KDB officials, the bank is reviewing plans to provide restructuring funds and has requested the carmaker to provide the necessary information within the week.
The KDB is said to be unwilling to make a decision on lending Ssangyong 150 billion won to fund the development of the sport utility vehicle C200, which was originally scheduled for launch later in the year, but postponed due to the strike, as the plans for normalising its operations have yet to be finalised.
The report adds that the government and the creditors are already said to be favouring selling Ssangyong to a third party as deeming that the chance of the carmaker surviving on its own is low.
According to reports, at least three firms, including one Chinese and one Indian company have so far expressed interest in Ssangyong.
