California-based HAAH floated as potential SsangYong Motor investor

2020.08.12 13:38:16 | 2020.08.12 15:34:19

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California-based import automotive distribution business HAAH Automotive Holdings has emerged as a potential candidate to take over South Korea’s troubled SsangYong Motor Co. which could be headed for the bankruptcy court next month if it does not find a replacement for its majority shareholder Mahindra & Mahindra fast.

According to its creditors and industry sources on Tuesday, HAAH Automotive Holdings discreetly visited SsangYong Motor’s plant in Pyeongtaek, Gyeonggi Province last month for due diligence, a field study before a potential buyout or investment.

The silver lining came after its parent Mahindra & Mahindra in a recent conference call confirmed it would be phasing out of SsangYong to push stakeholding to below 50 percent.

Pushing the stakeholding to below 50 percent would spell bankruptcy for SsangYong Motor who has taken out loans from global banks on the condition that Mahindra maintains ownership commanding a manager’s level.

“Currently, two companies are interested in SsangYong Motor, and HAAH is one of them. Creditors also are raising hopes for successful talks,” said a source from creditors.

SsangYong Motor shares on Wednesday fell 6.62 percent to close at 3,665 won in Seoul.

HAAH Automotive Holdings, founded in 2014, is a U.S. distributor for Chinese brand vehicles, targeting a niche market for affordable Chinese cars in the U.S. import car market mostly dominated by German and Japanese brands.

The company reportedly is partially owned by China’s Chery Automobile Co. It unveiled a new American near-premium brand Vantas in technical cooperation with the Chinese automaker in February and pledged all Vantas vehicles using Chery-designed platforms will be manufactured and sold in the U.S. from 2022.

HAAH Automotive Holdings could help the domestic-focused carmaker to make faster foray into other markets.

SsangYong Motor had nearly 389.9 billion won ($328.8 million) in debt maturing within a year, according to its first-quarter financial statement. Korea Development Bank earlier rolled over 90 billion won of loans due last month from it to the end of December, but the company still owes 8.75 billion won to KB Kookmin Bank, 15 billion won to Woori Bank, and 167 billion won to foreign lenders – nearly 90 billion won to JPMorgan Chase, 47 billion won to BNP Paribas and nearly 30 billion won to Bank of America.

Loans from foreign lenders were taken out on the condition that Mahindra maintains over 51 percent stake in SsangYong Motor, which means the carmaker would have to pay back debt if Mahindra’s holdings go down below 50 percent.

SsangYong Motor recently sold off its non-core assets including its maintenance and repair service center in Guro, Seoul for 180 billion won, but stayed mired in the red for 14 consecutive quarters in April-June. Its short-term debt reduced to total 199 billion won as of the end of last month.

By Choi Seung-jin, Lee Jong-hyuk, Chung Joo-won, Park Yun-gu and Lee Ha-yeon

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