(LEAD) SsangYong takeover-collapse

(LEAD) Edison's proposed acquisition of SsangYong Motor collapses on payment failure

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SEOUL, March 28 (Yonhap) -- SsangYong Motor Co., the South Korean unit of Indian carmaker Mahindra & Mahindra Ltd., said Monday it has canceled the deal to sell its controlling stake to Edison Motors Co. due to the electric bus maker's payment failure.

SsangYong announced the termination of the contract with a local consortium led by Edison, under which it had offered to buy the SUV-focused carmaker for 304.8 billion won (US$249.1 million).

Edison Motors has paid 10 percent of the acquisition money but failed to pay the remaining 274.3 billion won by the March 25 deadline.

"The contract was automatically canceled as the Edison Motors consortium did not pay the remainder for the acquisition five business days before the date of the creditors' meeting," SsangYong Motor said in a regulatory filing.

SsangYong said it will seek a new buyer and submit a new restructuring plan to the Seoul Bankruptcy Court.

The collapse of the deal marks yet another setback to SsangYong, the ailing SUV maker undergoing a court-led restructuring program since April last year after its Indian parent company failed to attract an investor amid the COVID-19 pandemic and its worsening financial status.

Edison was not immediately available for comments.

In January, the Edison consortium signed a final deal with SsangYong on the takeover following the Seoul Bankruptcy Court's approval of the acquisition plan.

But Edison Motors has had trouble raising funds for the takeover deal as Edison EV, its key affiliate involved in the funding, is struggling with its own financial trouble with consecutive operating losses.

SsangYong Motor's labor union and a creditors' group consisting of subcontractors have also opposed the takeover, citing the low debt repayment ratio proposed by Edison.

Edison Motors had requested the court allow the creditors' meeting to be postponed to buy time for the takeover process. The court was set to deliver its decision on the postponement request later in the day.

The creditors' meeting, slated for April 1, would discuss whether to approve Edison's proposed debt rescheduling plan.

Edison has said it will set up a special purpose company to raise from 800 billion won to 1 trillion won starting this year to invest in a stake of SsangYong through various means, including a rights issue, loans and bond issuance, to achieve a turnaround within three to five years.

Edison said it aims to transform SsangYong into an EV-focused carmaker in the next decade in line with changes in the automobile market.

China-based SAIC Motor Corp. acquired a 51 percent stake in SsangYong in 2004 but relinquished its control of the carmaker in 2009 in the wake of the global financial crisis.

In 2011, Mahindra acquired a 70 percent stake in SsangYong for 523 billion won and now holds a 74.65 percent stake in the carmaker.

For the whole of 2021, its vehicle sales fell 22 percent to 84,106 units from 107,324 a year earlier amid the pandemic and chip shortages.

SsangYong's lineup consists of the Tivoli, Korando, Rexton and Rexton Sports SUVs.

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