By Kim Hyun-cheol
Staff Reporter
The ailing Ssangyong Motor submitted a bailout program to a local court, Sunday, which didn't include any support from its Chinese parent firm.
The plan handed to the Seoul Central District Court to revive the Korean carmaker, which filed for court receivership earlier this month, has no proposal for a cash injection from Shanghai Automotive Industry Corporation (SAIC), according to industry sources.
Also, there is reportedly no explicit comment that SAIC will pay back its unpaid royalties for Ssangyong's technology for sports utility vehicle production. Ssangyong officials said the money will be paid in several stages, regardless of the bailout plan, because the payment should be made according to the signed contract between the two companies.
SAIC's lack of commitment in the plan seems to indicate that the Chinese auto giant's intention is to abandon its Korean unit. The company could reinforce its bargaining power as the main stakeholder even under the court receivership if it provided assistance, industry sources say.
South Korean creditors have asked SAIC to do its part first before they lend a helping hand to the carmaker.
If the court accepts the application for receivership next month, SAIC will lose its management control but still retain its majority stake. SAIC purchased a controlling 51 percent stake in Ssangyong for $500 million in 2004.
The program is also likely to trigger more protests from the carmaker's union, which has been in sharp conflict with its management over the years, especially since SAIC reportedly demanded Ssangyong undertake a radical restructuring ― cutting nearly half of its manufacturing workers in return for financial assistance.
The unionized workers have accused SAIC of having neglected its responsibility to take concrete measures to improve Ssangyong's competitiveness. Currently they are pursuing legal action against SAIC, saying it was only interested in ``legally stealing'' the company's technology.
With no move from the parent company, a creditors inspection of Ssangyong is likely to provide the key to its revival.
If the court approves the application, it has to wait and see who will administer the program.
Current executives of Ssangyong would have most likely been chosen under normal circumstances, but the consequence of an ongoing prosecution investigation into SAIC's technology transfer could see some changes.
Ssangyong's decision to file court receivership came following a SAIC-backed board meeting in Shanghai on coping with the imminent liquidity crisis.
As of November last year, Ssangyong posted 877 billion won ($644 million) in interest-bearing debts, with total debts reaching 1.46 trillion won ― 150 billion of which is due to mature in April. It also reported a net loss of 98 billion won in the first to third quarters last year.
Ssangyong reportedly has some 38 billion won in cash now, an amount that will keep the company going for less than two months.
Also on Sunday, several parts suppliers of Ssangyong petitioned for payment, the court said. Those companies, which produce audio systems and rear-view cameras, have said they could go bankrupt without receiving money owed to them.