Taking advantage of the success of Ssangyong Motor’s M&A, which has emerged as a ‘people’s deal’, the sales agents rolled up their arms to revive Ssangyong Motor. If they fall out of the Ssangyong takeover battle, it is interpreted that the seller is making the most of the situation where the candidates who have been shouting for sincerity can use the stigma of a ‘shepherd boy’ among the people.
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According to the investment banking (IB) industry on the 10th, it was confirmed that the 50 billion won DIP (Debtor In Possession) financial obligation is attached to the Ssangyong Bidding conditions, which close on the 11th. DIP financing means lending operating funds separately from acquisition funds.
Ssangyong Motor is putting its life and death into the success of its mid-size SUV model ‘J100 (project name)’. Accordingly, operating funds such as marketing expenses are required.
It is difficult for Ssangyong Motor to secure this funding on its own. Based on operating profit (loss), △2017 -65.2 billion won △ 2018 -64.1 billion won △ 2019 -281.9 billion won △ 2020 -449.3 billion won △ 2021 -261.2 billion won, etc. .
The success of the new car is more important than ever as it could prepare an important turning point for Ssangyong Motor’s revival. An official from the IB industry explained, “Ssangyong Motor is requesting financial support because it is based on the premise that if a new car is not released, sales will fall.”
When Edison Motors bid last year, DIP financing was requested. However, at that time, if DIP finance was provided, 5 additional points were given.
This time, however, it has been turned into a mandatory provision. It was not compulsory to provide DIP finance from the beginning. As SsangBall Group and KG Group expressed their intention to take over, the sale showed signs of success, so it seems that the sellers such as Ssangyong Motor and EY Hanyoung, the sales lead, have changed the DIP finance to mandatory for the reconstruction of Ssangyong Motor.
It is a burden for bidders. This is because, in addition to the amount to be paid to financial and commercial creditors, funds are also required to lend Ssangyong Motor’s operating funds. Edison Motors provided only 30 billion won out of 50 billion won in DIP finance contracted due to lack of funds, and the contract was also canceled.
But getting out of the deal isn’t easy. KG Group and Ssangbool Group have more than doubled their share price after they announced their intention to take over.
After the M&A contract between Edison Motors and Ssangyong Motor was canceled on March 28, SsangBall Group quickly expressed its intention to take over. Since then, stock prices have fluctuated, with stocks of Ssangbangbang, Kwanglim, Nanos, and IOK, such as Ssangbangbul Group, hitting their upper limits every day.
However, Ssangyong Group is helping Ssangyong Motor in terms of funding and deals. SsangYong Motor is able to claim operating funds for a turnaround because there is SsangBall Group that faces reputational risk if it is not completed. It also had the effect of initially selecting candidates without sincerity, such as EN Plus.
In addition, it is expected to have the effect of significantly blocking the last-minute ‘bashing’ characteristic of the revitalization deal. The acquisition of Dongbu Steel (now KG Steel) by KG Group is a typical example. When KG Group was selected as the preferred bidder, the initial acquisition price was estimated at 500 billion won, but it was cut down and finally decided to 360 billion won.
However, there are some voices of concern. An IB industry official said, “Ssangyong Motor’s M&A is basically a revival M&A.” “In the worst case, Ssangyong Motor’s brinkmanship tactics may face a headwind,” he added.
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