SsangYong Motor's headquarters in Pyeongtaek, Gyeonggi Province / Yonhap

By Baek Byung-yeul

Ssangbangwool Group, which is seeking to acquire SsangYong Motor, has forged a consortium with KH Group to facilitate the purchase of the debt-ridden SUV maker, the CEO of Kanglim, a Ssangbangwool affiliate, said Monday.

"Led by Kanglim, Ssangbangwool Group formed a consortium with KH Group, which successfully acquired the Grand Hyatt Seoul hotel and Alpensia Resort in PyeongChang. We recently expressed our determination to participate in the acquisition of SsangYong Motor," CEO Sung Seok-kyung said in a statement.

Kanglim, a heavy-duty electric vehicle (EV) maker, aims to create synergy with SsangYong, which is trying to transform itself into an EV maker. Ssangbangwool Group has set up a taskforce to buy SsangYong Motor.

SsangYong is up for sale again after Edison Motors, a local electric bus maker, failed to pay 274.3 billion won ($222.6 million) by a March 25 deadline. SsangYong filed for court receivership in December 2020, after failing to repay around 160 billion won worth of loans, and subsequently its Indian owner, Mahindra & Mahindra, put the company up for sale.

Following the collapse of the deal between SsangYong and Edison, the Seoul Bankruptcy Court gave the SUV maker a new deadline to find a new owner and submit a restructuring plan by May 1.

In order to acquire and operate the carmaker, hundreds of billions of won in operating funds are needed every year in addition to the 300 billion won Edison offered for the purchase of SsangYong. Regarding concerns over securing funding, Sung stressed, "We are preparing acquisition funds on our own by raising capital, while we are also making efforts to secure cash for operating and reserve funds."

Ssangbangwool Group said the consortium comprised of Kanglim and KH Feelux, a subsidiary of KH Group, submitted a letter of intent to acquire SsangYong to EY Hanyoung, an accounting company and the lead manager of the sale.

With Ssangbangwool revealing its intent to buy SsangYong, the takeover race is expected to come down to a showdown between it and KG Group, which has also announced its interest in buying the carmaker.

EY Hanyoung is expected to choose a buyer through a stalking-horse bid, which refers to the process of an initial bidder setting the minimum price bar and other potential buyers having to outbid it to become the new owner.

A SsangYong Motor spokesman said, "We are internally reviewing which of the three methods ― open bidding, private contract or stalking-horse bid ― will be advantageous to us." The official added the company will submit a new sale plan to the Seoul Bankruptcy Court within this week.