Ssangyong Motor to delay payment of Dec. wages amid liquidity crisis

SEOUL, Dec. 22 (Yonhap) -- Ssangyong Motor Co., the South Korean unit of China's
Shanghai Automotive Industry Corp. (SAIC), said on Monday it cannot pay its
workers' wages for December on time because of a prolonged liquidity crisis.

In a letter to employees, Ssangyong, the smallest automaker in South Korea, said
that "payment of salary for December is impossible due to a lack of funds for
operations." Ssangyong is expected to post a loss of up to 100 billion won
(US$76.9 million) this year, according to the letter.
"The letter doesn't mean that the company won't pay wages at all. It means the
payment is postponed," said an official at Ssangyong.
Hit by a continued sales slump at home and overseas, Ssangyong's cash reserves
have dwindled. The company's Chief Executive Officer, Choi Hyung-tak, recently
admitted that its reserves are fragile, saying it will likely face a "critical
period" early next year when a massive amount of debt is set to mature.
In the third-quarter of this year, Ssangyong lost 28.2 billion won (US$21.7
million), marking its fourth consecutive quarterly loss. Last month, the
automaker's sales plummeted 63 percent from a year earlier to 3,835 units.
Ssangyong has asked SAIC for months to inject fresh capital to help it ride out
the liquidity crisis. Talks between the automaker and its parent over a capital
injection are still "in progress," according to the official.
Meanwhile, Ssangyong has idled production from Dec. 17 until the end of the month
to reduce inventory. This is the third time this year that the troubled automaker
has suspended activity at its sole plant in the port city of Pyeongtaek, about 70
kilometers south of Seoul.
China's state-run SAIC acquired a 51-percent stake in Ssangyong for $500 million
in 2004.
(END)