Watchdog mulls helping Ssangyong subcontractors

SEOUL, Jan. 12 (Yonhap) -- South Korea's financial watchdog is weighing measures
to help subcontractors of teetering Ssangyong Motor Co. avoid bankruptcy
following the automaker's filing for court protection, a senior official said
Monday.

Ssangyong Motor, controlled by China's Shanghai Automotive Industry Corp. (SAIC),
filed Friday for court protection from creditors due to a tightening cash
squeeze, sparking worries about a chain-reaction of failures among its
subcontractors.
"Pending a court decision, it is hard to take concrete action, but the watchdog
is considering measures to protect Ssangyong's subcontractors," Rhee Chang-yong,
vice president of the Financial Services Commission (FSC), told a radio program.
Global carmakers, including General Motors and Chrysler LLC., have been hit hard
by the global financial turmoil and slowing economy. Ssangyong, South Korea's
smallest carmaker, faced deepening financial trouble in mid-2008 as vehicle sales
tumbled amid weakening domestic and overseas demand.
The FSC said it is reviewing alternative distribution channels for Ssangyong's
healthy subcontractors and is mulling whether to provide liquidity to companies
suffering from a temporary liquidity crunch.
SAIC, which holds a 51-percent stake in Ssangyong, will lose its management
control if the South Korean court accepts receivership.
SAIC took over the company for US$500 million in 2004, marking the first direct
investment by a Chinese company in a local manufacturer.
Ssangyong posted a net loss of 98 billion won ($72.8 million) in the
January-September period last year, hit by slumping sales.
sooyeon@yna.co.kr
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