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SsangYong turnaround plan still in limbo

Troubled times: Korean car-maker SsangYong hit a snag when bondholders knocked back its recovovery plan.

Australian SsangYong importer still hopeful of recovery plan approval

9 Nov 2009

SSANGYONG Motors remains a long-term proposition in Australia for its independent distributor Sime Darby, despite another setback last week in which the debt-stricken South Korean manufacturer failed to win approval of its turnaround plan.

Still in court-administered receivership, which it entered in February, SsangYong gained more than 90 per cent of votes from collateral bondholders and shareholders, but received the support of only 41 per cent from non-collateral bondholders.

The latter are understood to be foreign creditors hoping to get a better payout through negotiations that will now recommence before the Seoul Central District Court sits again for a final vote on the plan on December 11.

Sime Darby Motors Group (Australia) managing director Rob Dommerson told GoAuto this week that he was hopeful of a resolution before the year’s end, which would see important new models – namely, the C200 SUV – back on the front-burner.

 center image Left: SsangYong C200 Concept.

“SsangYong is still a long-term prospect for us,” he said. “It is working through the court of receivership up in Korea, which most other Korean car companies have been through, and it will just take some time to get through the process.

“We are still hopeful that that is all going to be resolved.”

To win support from the bankruptcy court, SsangYong, which is majority-owned by China’s Shanghai Automotive Industry Corporation (SAIC), needs approval of more than three-quarters of its collateral-based bondholders, two-thirds of non-collateral bondholders and half of its shareholders.

The turnaround plan includes writing off some 80 per cent of shares owned by SAIC – a move that would reduce the Chinese auto giant’s stake from 51 per cent to 11.2 per cent – and converting hundreds of millions of dollars of debt into new shares that should attract overseas investors.

“We’re still pretty positive,” Mr Dommerson said. “The thing that attracted us to SsangYong is the product. The product is outstanding, it really is. It’s well built, it’s well priced, and it’s well regarded in the market by the current dealers and the customers.

“If you don’t have those basic ingredients, you really don’t have a strong franchise. So we’re still very big believers in the product – and, of course, they’re scheduling new product going forward, including the C200.”

Sime Darby took control of SsangYong distribution from SsangYong Motors Australasia in September last year.

VFACTS figures released last week show that the company sold twice as many cars last month as it did in October 2008, although the total of 61 units for the brand as a whole remains well below expectations. Year-to-date, SsangYong is also down 36.8 per cent.

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