KDB not to extend financial support to SSangyong Motor

SEOUL, Dec. 25 (Yonhap) -- South Korea's state-run Korea Development Bank (KDB) said Thursday it would not provide financial support to SSangyong Motor Co. unless the troubled Korean automaker's Chinese parent firm provides help first.

KDB, the main creditor of Ssangyong, said Shanghai Automotive Industry Corp.
should first arrange 200 billion won (US$152 million) loan from Chinese banks and
pay technology transfer fee of 120 billion won to its South Korean unit.
"SSangyong Motor called for us to provide new capital, but we notified the
company our financial support will not be given until its parent firm supports it
financially," a KDB official said.
KDB then will review whether SSangyong Motor can turn itself around once helped
by the parent company, he said.
According to industry sources, SSangyong Motor has secured a 200 billion won
credit line with two Chinese lenders including the Bank of China, but Shanghai
Automotive has yet to guarantee payment.
Hit by a deepening sales slump at home and abroad, SSangyong Motor is suffering
from severe cash shortages.
In the third quarter of this year, Ssangyong lost 28.2 billion won, marking its
fourth consecutive quarterly loss. Last month, the automaker's sales plummeted 63
percent from a year earlier to 3,835 units.
The carmaker has decided to idle its production lines from Dec. 17 until the end
of the month to reduce inventory. This is the third time this year that it has
suspended activity at its sole plant in the port city of Pyeongtaek, about 70
kilometers south of Seoul.
In addition, the chief executive of Ssangyong Motor warned on Tuesday that the
Chinese parent will pull out from the carmaker if its labor union resists
restructuring.