SEOUL, March 28 (UPI) — South Korean automaker SsangYong Motor, which is owned by India’s Mahindra & Mahindra, said Monday that a deal to sell SsangYong to Edison Motors had fallen apart due to the latter’s failure to pay.
Last year, a consortium led by electric vehicle maker Edison was picked as the preferred bidder for SsangYong, a cash-strapped manufacturer of utility vehicles.
By January, the consortium had paid 10% of the acquisition money, which amounts to around $250 million, and was supposed to deliver the remaining 90% by Friday. However, it failed to do so.
The collapse of the deal was widely expected, as SsangYong’s creditors showed skepticism over the Edison consortium’s capability to secure the necessary funds. The carmaker’s union and suppliers held similar stances.
In the Seoul bourse, Edison’s share price plunged by a daily limit of 30% Monday, finishing at $10. Its price once topped $65 last year after the SsangYong deal was approved by the court.
“As Edison Motors’ purchase of SsangYong was scrapped, we will seek a new owner as soon as possible,” a SsangYong official told UPI News Korea. “We have to finish all the procedures before the court receivership finishes later this year. We will hurry up.”
SsangYong filed for court receivership in December 2020, which was approved in April 2021. The yearlong receivership can be extended by six months.
Observers say that SsangYong will face difficulties finding a new bidder with deep pockets. In last year’s bidding, California-based car importer HAAH Automotive took part.
“I don’t think that SsangYong will easily be able to find a new owner. But the company has no choice but to try to do so,” Daelim University automotive professor Kim Pil-soo said in a telephone interview.
“I am afraid that the automaker will eventually be liquidated,” he said.