Shown above is a car repair shop operated by SsangYong Motor west of Seoul. The Korean carmaker filed for court receivership this week due to the snowballing debts. Photo courtesy of SsangYong Motor

India-owned Korean automaker fails to pay debt

SsangYong Motor filed for court receivership early this week as the beleaguered company struggles to pay off its mounting debts. India’s Mahindra & Mahindra owns the Korean automaker.

Last week, the troubled carmaker could not pay $55 million debts to its foreign creditor banks, including JP Morgan, which refused SsangYong’s requests to roll them over.

SsangYong also failed to pay some $82 million loans due this week to its main creditor of the state-run Korea Development Bank, which already delayed the payment this summer.

“We will be able to receive a maximum of three-month suspension of our obligation to pay debts. During the period, we aim to find a new investor,” a SsangYong spokesman said.

Mahindra was initially poised to support SsangYong by offering some $200 million, but the Indian outfit canceled the investment plan in April. Mahindra holds an almost 75-percent stake in SsangYong.

Then, Mahindra expressed its willingness to dispose of SsangYong. HAAH Automotive Holdings of the United States reportedly showed interest in SsangYong.

SsangYong says that it is in talks with a potential buyer but refused to confirm whether or not it is HAAH Automotive whose main business is to import cars for American motorists.

“Amid the snowballing debts, SsangYong could not cope with the mobility industry’s shift to electric cars and the virus outbreak this year. As a result, it ended up filing for court receivership,” NH Investment & Securities analyst Cho Soo-hong said.

“In order to stay afloat, SsangYong has two options of procuring public funds or finding a new owner with financial leeway. For now, we cannot say for sure how the company will be able to achieve any of the two options,” he said.

SsangYong’s loss approached $100 million loss during the third quarter of this year. The outfit has suffered from operating losses for 15 consecutive quarters in a row since 2017.

This is not the first time for SsangYong to file for court receivership, a Korean system designed to help money-losing companies avoid bankruptcy _ it went through the same procedure in 2009.

In the wake of the 2008 global financial crisis, its owner of China’s SAIC Motor relinquished SsangYong. Mahindra gobbled up a controlling stake in the SUV-focused Korean carmaker in 2011.