Bank may liquidate Ssangyong if SAIC gives no aid

Shanghai, December 31 (Gasgoo.com) Ssangyong Motor Co. may be liquidated by a S.Korean bank if its Chinese parent SAIC Motor Corp. fails to provide 320 billion won ($249 million) as new financial support to the Korean automaker, reported Shihua Financial Information yesterday.

Korea Development Bank (KDB), Ssangyong's largest creditor, may try to liquidate rather than debt-restructure its failing debtor Ssangyong Motor if SAIC pulls out, said an official of the bank. SAIC has to provide the funds, including a credit line from a Chinese bank, as soon as possible as the Korean SUV-maker will need 600 billion won of new financing next year, the official said.

Last week, KDB had urged SAIC to provide Ssangyong with 120 billion won in cash in return for the transfer of technology. KDB also called on SAIC to guarantee a combined 200 billion won worth of loans from two Chinese banks to Ssangyong. A KDB official said his bank would be willing to consider extending new loans to Ssangyong, but only if SAIC first granted assistance to its Korean subsidiary.

Ssangyong, S. Korea's fifth largest automaker, which focuses on making the Rexton and Kyron SUVs, has halted production in the second half of December because of slumping auto sales. In November it sold 3,835 vehicles, down 63% from a year earlier, while monthly sales by all South Korean auto makers fell 8.6%.

Ssangyong saw its vehicle sales plunge 27% in the first 11 months this year and now is in urgent need of financial aid. The automaker owes about 240 billion won to Korea Development, according to the bank.

SAIC, China's biggest carmaker and also a Chinese partner of General Motors and Volkswagen AG, holds 51% of Ssangyong. The Korean automaker will discuss a capital injection from SAIC, and the two companies are also seeking assistance from the S.Korean government.