Unable to pay the remaining 274.3 billion won
Ssangyong Motor to notify cancellation of contract on the 28th
The Edison Motors consortium’s takeover of Ssangyong Motor failed. The reason for the immediate termination of the contract occurred because Edison Motors did not pay the balance of 274.3 billion won in the acquisition price by the due date. Ssangyong Motors notified Edison Motors of the contract termination on the 28th and decided to disclose it.
According to the investment banking (IB) industry on the 27th, Ssangyong Motor, the Seoul Rehabilitation Court, and EY Hanyoung, the manager of the sale, held negotiations last weekend when the balance (274.3 billion won) of the acquisition price (304.9 billion won) was not deposited by the 25th, the due date for payment. It was concluded that there was a cause for immediate termination of the contract.
In the contract signed by Ssangyong Motor and Edison Motors, ‘Edison Motors must complete the payment of the purchase price by March 25, five business days before the date of the assembly of related parties (April 1), and if this is not fulfilled, the contract will be terminated immediately’. Officials explained that the contents were clearly stated. As the cause of contract termination is provided by Edison Motors, Edison will not be able to receive the down payment of 30.48 billion won.
On the 18th, Edison Motors requested EY Hanyoung to postpone the assembly and continue the acquisition process. However, Ssangyong Motor and EY Hanyoung discussed with the court and sent out an official notice on the 25th that the assembly might not be postponed. Nevertheless, it is explained that the contract was eventually canceled because Edison Motors did not pay the balance of the acquisition price.
An IB industry official said, “Edison Motors decided to loan 50 billion won in operating capital to Ssangyong Motor at the time of the bidding, but it did not pay 20 billion won by the 21st, so this alone has already caused a reason for canceling the contract. It wasn’t,” he said. Accordingly, Ssangyong Motor was in a situation where it had to find the owner from the beginning once more.
By Min Ji-hye, staff reporter spop@hankyung.com
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