Even at the lowered level, doubts about the ability to mobilize funds remain… Pain expected even if the right side is selected
[팍스넷뉴스 권준상 기자] The sale of Ssangyong Motor is Orimujung. Although it is about to select a preferred bidder, concerns about the financial power of the original buyers are growing, and the possibility of a bid is flowing. SsangYong Motor, which has not been able to improve its competitiveness amid the change of ownership several times, is expected to experience considerable pain in seeking long-term growth this time as well.
According to the investment banking (IB) industry on the 15th, EY Hanyoung Accounting Corporation, the lead seller for Ssangyong Motor, closed the submission of supplementary documents from original buyers on the same day, including proof of funds, business normalization and investment plans. Previously, the Seoul Rehabilitation Court judged the EL B&T consortium (Pavilion Private Equity, Cardinal One Motors) and the Edison Motors consortium (Edison Motors, Keystone Private Equity, KCGI, TG Investment, Semisysco), including proof of funds in the bid documents, etc. It was notified twice that supplementation was required.
EY Hanyoung Accounting Firm will review the documents submitted by original buyers and submit them to the court. Considering this, the preferred bidder is expected to be selected within the next week.
In selecting the preferred bidder, the acquisition price and business plan including business normalization are reflected. The bidding price of each candidate before the takeover of Ssangyong Motor is in the low 500 billion won range for the LBNT consortium and 280 billion won for the Edison Motors consortium. Inside and outside the auto industry, it is estimated that the actual required size of the acquisition of Ssangyong Motor is about 1 trillion won when considering public interest bonds and future investment costs. The possibility of securing additional funds in the future through solidarity with financial investors (FIs) is open.
However, as the court repeatedly demanded that the original buyers of Ssangyong Motor supplement their bid documents with proof of funds, doubts are growing about their ability to mobilize their funds and whether they will be able to lead Ssangyong Motor in the long term. It is also pointed out that it is questionable whether the stability and sustainability of money transfusions through financial investors (FIs) will be guaranteed.
As the process of selecting a preferred bidder is delayed, complaints from original buyers seem to be pouring out. An IB industry official who is well aware of the deal said, “The Edison Motors consortium offered 280 billion won for Ssangyong Motor, but I know that the sales organizer wanted 350 billion won.” They seem to be dragging people who are not qualified (ELBNT consortium) by giving them wealth.” According to the IB industry, it is known that the LBNT consortium did not deposit the deposit (3 billion won) that it had to deposit at the time of the main bidding.
ELBNT has formed alliances with Pavilion Private Equity and Cardinal One Motors (formerly HAAH Automotive). They point out that although the proposed acquisition price is higher than that of the Edison Motors consortium, it is uncertain whether they will be able to raise a substantial amount of money for the acquisition in a short period of time by working with Cardinal One Motors, which had difficulties in securing initial investment.
The Edison Motors consortium said that it has completed sufficient proof of funds. A high-ranking official from the Edison Motors consortium said, “We have already completed the proof of more than 50% of the 280 billion won offered for the acquisition. submitted,” he said. “The supplement to the business plan was also to specify the period of employment succession,” he explained.
As labor continues ahead of the selection of a preferred bidder, the possibility of a bid is being raised in some parts of the market. It is also the view that a re-bid scenario after the bidding cannot be ruled out.
Even if the preferred bidder is selected, there are many hurdles to overcome. One example is the financial support of KDB Industrial Bank (KDB), the main creditor bank of Ssangyong Motor. In the meantime, the Bank of Korea has maintained that as a precondition for financial support, attracting investors with management skills and a sustainable business plan should be the basis. Based on this, it is explained that it can decide whether or not to provide financial support after reviewing the feasibility.
“I hope that Ssangyong Motor will be able to meet great investors and lay a foothold for revival,” said Lee Dong-geol, chairman of KDB, during a parliamentary audit by the National Assembly Political Affairs Committee on the same day. “If the preferred bidder is selected, investors, KDB, the government, the labor union, and Ssangyong Motor will put their heads together and think about it,” he added.
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