SOUTH Korean manufacturer SsangYong Motor Company (SYMC) has applied for rehabilitation procedures after failing to reach agreements on loan repayments.
The carmaker applied for court protection yesterday (Monday) after failing to meet the latest repayment in loans of around £40bn owed to Bank of America, JP Morgan Chase and BNP Paribas.
SYMC said in a statement that it delayed repayment of loans and interest due to worsening business conditions. The company has been seeking to extend the maturity date with its lenders, but has been unable to reach an agreement, and decided to apply for rehabilitation procedures to avoid interrupting its business operations.
There are 65 dealers in the UK operating under SsangYong Motors GB. The South Korean company, owned by Mahindra of India, plans to resolve the current liquidity issue early before the rehabilitation procedures are commenced by applying for Autonomous Restructuring Support.
Autonomous Restructuring Support is a private restructuring support programme made with the court which delays the initiation of the rehabilitation procedures by up to three months while the company continues its attempts at private restructuring.
During this period, the company continues its normal business activities. When the company and its interested parties reach the final agreement for the restructuring, the rehabilitation procedure application is withdrawn, and it returns to its normal company status without harm to its reputation.
A Mahindra spokesman, said: “During the period of Autonomous Restructuring Support, Mahindra will take responsibility as a major shareholder, and actively cooperate with SsangYong for the normalisation of management through to the early conclusion of negotiations with interested parties.”
A SYMC statement added: “We very much regret this situation which is the result of the difficulties being experienced from the worldwide COVID-19 situation, and the concern caused to our partners and stakeholders, especially our employees, sales networks and financial institutions. We are making every effort to transform the situation, and to build a more robust and competitive company for the future.”
SsangYong Motors UK said it will continue to operate as normal. Managing Director Kevin Griffin, said: “Whilst this situation is not ideal, I strongly believe that the Autonomous Restructuring Programme will result in the birth of a stronger company. I want to reiterate that our UK operations are totally unaffected, and we are very much open for business.”