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Gov`t Preparing to Say Goodbye to Ssangyong

Posted July. 30, 2009 08:20,   


The government is bracing for Ssangyong Motor’s possible liquidation. A Seoul court will make the final decision on liquidation after Sept. 15, but the administration is apparently preparing for the worst-case scenario.

Senior officials at the presidential office and the ruling Grand National Party yesterday said the government is discussing how to minimize the impact of the impending liquidation on the company’s parts suppliers, and provide components and warranty service for Ssangyong car owners.

One presidential official said that while the court will determine Ssangyong’s fate, the administration is preparing post-liquidation measures because of widespread skepticism over the automaker’s future.

The court decision on Ssangyong’s liquidation will come after the carmaker’s court-appointed manager submits a revival plan by Sept. 15.

The official also said the government has to prepare for a possible situation if auto parts suppliers, Ssangyong’s biggest creditors, seek the carmaker’s bankruptcy before Sept. 15. The government plans to support the suppliers to minimize the expected fallout from Ssangyong’s liquidation.

The government apparently believes the analysis that Ssangyong will be worth more dead than alive.

Through Tuesday, the Ssangyong union’s strike has cost the company 292.4 billion won (235 million U.S. dollars) in lost production. The automaker in the first quarter suffered 125.7 billion won (101 million dollars) in operating losses.

Another presidential official said the prolonged strike has undermined the basis for the carmaker’s survival, namely downsizing, new credit and the development of six new models.

The government’s low assessment of Ssangyong’s prospects will negatively affect the state-run Korea Development Bank’s proposed injection of 250 billion won (202 million dollars) in new capital.

A senior ruling party source supported this view, citing opinions in favor of Ssangyong’s liquidation in January, when the company filed for court receivership.