Ssangyong Motor welcomes KG Consortium as its new owner.

Ssangyong Motor Company announced on the 28th that it had selected the KG Consortium as the final buyer after receiving approval from the Seoul Rehabilitation Court.

With this, the KG consortium acquired Ssangyong Motors for approximately KRW 900 billion, including KRW 335.5 billion in acquisition price and KRW 564.5 billion in operating funds.

The KG Consortium is comprised of special purpose corporations (SPCs) △KG Mobility △KG ETS △KG Steel △KG Inicis △KG Mobilians and Cactus PE △Pavilion PE, and the consortium representative is KG Mobility.

Ssangyong Motor and EY Han Young, the lead manager for the sale, selected KG Consortium as the prospective buyer through a limited competitive bidding process and signed a conditional investment agreement on May 18.

Following the sale procedure, the public sale was announced on June 2nd and the acceptance of acquisition proposals closed on June 24th. As a result, Gwanglim Consortium was the only one to submit an acquisition proposal for selection as the highest scoring and final acquisition candidate.

Accordingly, as a result of evaluating the acquisition conditions proposed to the Gwanglim Consortium based on the criteria for selecting the highest scoring and final acquirer that had received prior approval from the rehabilitation court, the KG Consortium received a lower score than the score obtained by the KG Consortium at the time of selection of the final acquirer before the announcement, and therefore did not become the highest scoring consortium. As a result, the KG Consortium was selected as the final acquirer without exercising the preemptive right, and the conditional investment agreement was also confirmed without change.

According to the criteria for selecting the highest scorer and final acquirer, the acquisition price [regulation]We comprehensively evaluated other items such as the mother company and required share ratio, payment method (paid-in capital increase or corporate bonds), and proof of financing), post-acquisition operating funds (scale and financing method (paid-in capital increase or borrowing), and proof of financing), and employment succession.

This means that only when there is a higher scorer than the pre-announcement prospective buyer, the highest scorer is selected and the pre-announcement prospective buyer is notified of whether or not to exercise the pre-announcement right.

In this resale, the company and the sale underwriters considered not only the size and scale of the proposed amount to be important, but also the certainty of securing that amount and the form in which it would be brought into the company (capital or debt, etc.).

This is not only to prevent cases of failure to pay the balance of the acquisition price before the meeting of stakeholders and to ensure the certainty of repayment of public bonds that must be paid to partners after the acquisition, but also to minimize the company's long-term financial instability due to excessive debt after the acquisition.

As a result of the evaluation, in terms of the acquisition price for repayment of rehabilitation bonds, Gwanglim Consortium received a higher score than KG Consortium, which proposed KRW 335.5 billion, by proposing KRW 380 billion in the form of paid-in capital increase and the same required stake ratio (58.85%) as KG Consortium.

Meanwhile, the Gwanglim Consortium proposed 750 billion won in operating funds after the acquisition, but excluding the 150 billion won presented as proof of fund raising, it was merely a simple plan such as a paid-in capital increase through a public offering by an affiliate and the issuance of CBs through attracting overseas investors, and it failed to secure financial investors.

On the other hand, the KG Consortium secured a high score that exceeded the score difference in the acquisition price by deciding to raise all of its operating funds of 564.5 billion won through a paid-in capital increase using its own funds.

Ssangyong Motor and the sale underwriter will not only comply with the M&A guidelines for rehabilitation companies in this resale, but will also obtain approval from the rehabilitation court at each stage.I ensured fairness and transparency by reporting progress.

In particular, the resale process was conducted with a focus on securing the certainty of post-acquisition operating funds and the company's financial soundness, in order to ensure the repayment of public interest bonds amounting to approximately KRW 500 billion immediately after the acquisition, as well as the acquisition price used for repayment of rehabilitation bonds, etc.

With the KG Consortium selected as the final buyer, Ssangyong Motor is expected to prepare a rehabilitation plan based on the conditional investment agreement already concluded and submit it to the court before the end of July 2022, and hold a meeting of stakeholders to obtain consent from creditors and shareholders in late August or early September.

Ssangyong Motor Company administrator Jeong Yong-won said, “With the final buyer selected, the foundation for management normalization has been laid,” and added, “There may be some shortcomings from the perspective of stakeholders such as creditors, but the acquisition amount has increased compared to the investment contract with the Edison Motors consortium and the buyer’s required stake has been lowered, which has resulted in a higher actual repayment rate for rehabilitation bonds.” He added, “In particular, by securing funds to repay public bonds, this will be of real help to rehabilitation creditors,” and asked for understanding and cooperation.