Ssangyong Motor asks SAIC for fresh capital

Ssangyong Motor Co, the South Korean unit of China's Shanghai Automotive Industry Corp. (SAIC), has called for the Chinese parent to restore its capital base amid a prolonged liquidity crisis, according to a newsletter issued by Ssangyong's labor union on Tuesday.

In the newsletter, Ssangyong's Chief Executive Officer Choi Hyung-tak told union leaders that he asked SAIC to inject an "emergency fund" into his company to overcome the current crisis.

"We desperately need massive new capital because debts will mature in April next year," the newsletter quoted Choi as saying.

"Early next year will be a critical period for us," the statement read.

Choi said Ssangyong had incurred more than 100 billion won (US$68.3 million) in losses for the July-September period.

In a statement, Ssangyong Motor said it will freeze new hiring next year and cut 10 per cent in bonus payments for its executives.

Ssangyong reported a net loss of 28.2 billion won for the third-quarter of this year, marking its fourth consecutive quarterly loss.

Shares of Ssangyong Motor have tumbled more than 90 per cent so far this year amid dismal earnings.

Ssangyong, South Korea's smallest automaker, has been hit by a liquidity crisis amid faltering sales.

On Monday, Ssangyong said its November vehicle sales plunged 63 per cent from a year earlier to 3,835 units.

China's state-run SAIC acquired a 51 per cent stake in Ssangyong for US$500 million in 2004.