SsangYong Motor is facing increased pressure to find new investors as it struggles to stay financially afloat as one of its local creditors withdrew their loans.
Industry sources said KB Kookmin Bank has recently recovered all loans from SsangYong Motor, the balance of which stood at 8.75 billion won ($7.39 million) as of the end of the first quarter.
The move puts the automaker under more pressure to repay other borrowings in time, with 389.9 billion won worth of loans coming due over the next year, although local banks have given the company more time to pay.
Woori Bank‘s 15 billion won in loans were extended until the end of the year. The state-run Korea Development Bank also extended the maturity of 90 billion won in loans SsangYong had to pay back in July to the end of the year.
SsangYong’s bigger concern is loans borrowed from foreign financial institutions, with 166.8 billion won coming from banks such as JP Morgan (89.9 billion won), BNP Paribas (47 billion won) and Bank of America (29.9 billion won).
SsangYong Motor’s priority is to find a new investor to replace its major shareholder, India’s Mahindra Group. Mahindra recently said it would lower its stake from the current 75 percent to less than 50 percent, giving up its status as majority shareholder if it finds a new investor in the automaker.
Currently, Chinese companies such as Geely Motors and BYD, and California-based HAAH Automotive Holdings are reported to be interested in purchasing SsangYong.
Some local news outlets reported creditors had pressed for court receivership if SsangYong fails to find a new investor within this month. However, SsangYong dismissed the speculation, saying “It has not received any notice for court receivership (from creditors) and is currently in the process of seeking new investors.”
By Shin Ji-hye (email@example.com