The Seoul Rehabilitation Court has approved the signing of a memorandum of understanding (MOU) between Ssangyong Motor and Edison Motors consortium. Edison Motors will begin a two-week due diligence.
Ssangyong Motor announced on the 3rd that it had signed a memorandum of understanding with the Edison Motors consortium, which was selected as the preferred bidder, and obtained permission from the court.
Ssangyong Motor explained, “It has specified the rights and obligations of Ssangyong Motor and Edison Motors regarding the signing of the investment contract.
Ssangyong Motors granted exclusive preferential negotiation rights to Edison Motors. When an investment contract is concluded or three months pass, the right to negotiate expires. The period of recognition of the right to negotiate may be extended with the permission of the court.
If the investment contract is not signed and the MOU loses effect, Ssangyong Motor can negotiate with other investors and ‘Edison Motors cannot raise objections such as civil or criminal lawsuits’.
Edison Motors plans to conduct a detailed due diligence on Ssangyong Motors for two weeks (10 business days) until the middle of this month to examine specific assets and liabilities. Ssangyong Motor is estimated to have about 700 billion won in debt, including public interest bonds.
This contract will be concluded based on the results of detailed due diligence in the future. The investment contract is expected to be signed by the end of this month at the earliest. If the negotiation period is prolonged, the contract signing date will also be delayed.
When the main contract is concluded, Ssangyong Motor will submit to the court a rehabilitation plan containing debt repayment and specific financing plans. Ssangyong Motor previously postponed the deadline for submitting the rehabilitation plan, which was on the 1st of this month.
In order to finalize the rehabilitation plan, creditors must also go through the approval process. The rehabilitation plan containing the repayment rate of rehabilitation claims must be approved by at least two-thirds of the creditors at a meeting of related parties.
