ID :
38005
Tue, 12/30/2008 - 14:08
Auther :
Shortlink :
http://m.oananews.org//node/38005
The shortlink copeid
Ssangyong Motor's fortunes turn bleaker after junk bond rating
SEOUL, Dec. 30 (Yonhap) -- The troubles of Ssangyong Motor Co., which will face liquidation unless its Chinese parent Shanghai Automotive Industry Corp. injects fresh capital, deepened Tuesday after a local credit risk appraiser cut its rating to junk bond status.
The move will make Ssangyong's efforts to seek new loans from South Korean banks
even harder with its cash reserves dwindling amid a prolonged liquidity crisis
and a sharp decline in vehicle sales.
Korea Investors Service Inc. downgraded its rating for Ssangyong's long-term debt
by two notches to "BB" from an investment-grade "BBB-."
"The downgrade reflect a growing uncertainty related to a capital injection from
its main shareholder," the appraiser said in a report, referring the Chinese
state-run automaker SAIC.
SAIC, which owns a 51-percent stake in Ssangyong, has been under pressure to
provide fresh funds to the affiliate in South Korea.
Korea Development Bank, Ssangyong's main creditor, called for SAIC to provide 320
billion won (US$254 million) to the ailing carmaker. If so, KDB said it will
consider extending loans to Ssangyong.
Shares of Ssangyong, which have plunged more than 80 percent so far this year,
dropped four percent to 960 won at one time in morning trading on Tuesday in
Seoul.
On Monday, two Chinese media outlets reported SAIC was preparing to exit
Ssangyong, but Ssangyong officials denied the reports.
Senior executives from SAIC have met South Korean government officials to discuss
a possible rescue plan for Ssangyong, which employs about 7,200 South Korean
workers.
SAIC has reportedly asked Ssangyong to cut its workforce if it wants to receive
financial support.
Earlier in the day. a local business daily Maeil Business said that, citing an
unnamed company source, the Chinese parent called on Ssangyong to slash some
2,000 employees. In a statement, Ssangyong also denied the report.
"For the long-term survival of Ssangyong Motor, the issue of workforce reduction
should be resolved first," the company's Chief Executive Officer Choi Hyung-tak
told reporters on Monday before a meeting with its labor union and SAIC
executives.
But, the union officials have threatened to strike if the company cuts the
workforce.
"We will continue to fight to thwart the management's restructuring plan," said
Han Sang-kyu, leader of the Ssangyong union.
Ssangyong, the smallest carmaker in South Korea, is expected to post a loss of up
to 100 billion won this year. The liquidity shortage forced the company to delay
salary payments.
Hit by a continued slump in vehicle sales, Ssangyong is idling its lone plant for
three weeks. This is the third time this year that the troubled automaker has
suspended activity at the plant in the port city of Pyeongtaek, about 70
kilometers south of Seoul.
Last month, Ssangyong, which has a production capacity of 200,000 vehicles a
year, sold 3,835 vehicles, down 63 percent from a year ago.
(END)
The move will make Ssangyong's efforts to seek new loans from South Korean banks
even harder with its cash reserves dwindling amid a prolonged liquidity crisis
and a sharp decline in vehicle sales.
Korea Investors Service Inc. downgraded its rating for Ssangyong's long-term debt
by two notches to "BB" from an investment-grade "BBB-."
"The downgrade reflect a growing uncertainty related to a capital injection from
its main shareholder," the appraiser said in a report, referring the Chinese
state-run automaker SAIC.
SAIC, which owns a 51-percent stake in Ssangyong, has been under pressure to
provide fresh funds to the affiliate in South Korea.
Korea Development Bank, Ssangyong's main creditor, called for SAIC to provide 320
billion won (US$254 million) to the ailing carmaker. If so, KDB said it will
consider extending loans to Ssangyong.
Shares of Ssangyong, which have plunged more than 80 percent so far this year,
dropped four percent to 960 won at one time in morning trading on Tuesday in
Seoul.
On Monday, two Chinese media outlets reported SAIC was preparing to exit
Ssangyong, but Ssangyong officials denied the reports.
Senior executives from SAIC have met South Korean government officials to discuss
a possible rescue plan for Ssangyong, which employs about 7,200 South Korean
workers.
SAIC has reportedly asked Ssangyong to cut its workforce if it wants to receive
financial support.
Earlier in the day. a local business daily Maeil Business said that, citing an
unnamed company source, the Chinese parent called on Ssangyong to slash some
2,000 employees. In a statement, Ssangyong also denied the report.
"For the long-term survival of Ssangyong Motor, the issue of workforce reduction
should be resolved first," the company's Chief Executive Officer Choi Hyung-tak
told reporters on Monday before a meeting with its labor union and SAIC
executives.
But, the union officials have threatened to strike if the company cuts the
workforce.
"We will continue to fight to thwart the management's restructuring plan," said
Han Sang-kyu, leader of the Ssangyong union.
Ssangyong, the smallest carmaker in South Korea, is expected to post a loss of up
to 100 billion won this year. The liquidity shortage forced the company to delay
salary payments.
Hit by a continued slump in vehicle sales, Ssangyong is idling its lone plant for
three weeks. This is the third time this year that the troubled automaker has
suspended activity at the plant in the port city of Pyeongtaek, about 70
kilometers south of Seoul.
Last month, Ssangyong, which has a production capacity of 200,000 vehicles a
year, sold 3,835 vehicles, down 63 percent from a year ago.
(END)
