Edison Motors' attempted acquisition of SsangYong Motor has ended in failure. In a regulatory filing Monday, SsangYong said it terminated the acquisition contract after a consortium led by Edison Motors had failed to deposit a payment by the March 25 deadline. SsangYong once raised expectations of a new start after its acquisition by a Korean company, but now faces a rough road ahead.
Last October, the Seoul Bankruptcy Court designated the Edison consortium as the preferred bidder. Still, it ended up wasting five more months, as the consortium failed to pay the price of 304.9 billion won ($274.3 million).
SsangYong Motor once led the domestic SUV market with its jeep model, Korando. However, the company was pushed out of the race as its owners continued to change and it was driven to the edge of a precipice, unable to join the rapidly changing trends of the automobile market since the 2000s. If the company fails to find another owner by the October court receivership deadline, it will enter a liquidation procedure. Up to 200,000 people related to the troubled carmaker, including its suppliers, let alone 5,000 SsangYong executives and employees, will end up out on the streets.
To prevent its collapse, Ssangyong needs to find a new owner. Fortunately, there are signs that the current circumstances are better than last year's. SsangYong's electric vehicle model J100, the development of which was once uncertain, is scheduled to be unveild in late June. The company plans to release another EV model, U100, in the latter half of next year in collaboration with China's BYD, speeding up its conversion to eco-friendly vehicles.
SsangYong Motor's sale can be a burden for the incoming Yoon Suk-yeol administration, which will take office in May. However, at stake is a 60-year-old carmaker and the livelihoods of 200,000 workers. The state-run Korea Development Bank, the main creditor of SsangYong, can hardly inject any more funds. SsangYong's union and management have done what they could to keep their company afloat. However, all stakeholders should tighten their shoelaces once again. Otherwise, they will be unable to justify it if the company has to reach out to creditors or the government later.