Chinese-owned Ssangyong Motor of South Korea, hit by falling auto sales in the face of the global slowdown, said yesterday it had applied for court receivership to avoid bankruptcy.
Just two weeks after the automaker was turned down for new bank loans, the company said its Chinese parent Shanghai Automotive Industry Corp (上海汽車) had decided the move at an emergency meeting of its board on Thursday.
“The board of directors decided to apply for a court receivership in order to cope with the current liquidity crisis and turn the company into an entity capable of continuous growth,” Ssangyong said in a statement.
PHOTO: AFP
“At the same time, we will work out measures to normalize the company, and execute them strongly,” it said.
The application was filed with the Seoul central district court yesterday, a spokesman said. He said the courts will now decide “whether the company should be kept afloat or be liquidated.”
The court is expected to order Ssangyong Motor assets to be frozen to protect them from creditors before making a ruling on whether the company should be rescued or liquidated within a month.
It remains unclear whether there will be any appetite for Ssangyong among potential buyers as consumers are increasingly turning away from Ssangyong’s main line-up, Sports Utility Vehicles, amid the global economic crisis.
Ssangyong has fallen into financial crisis amid slow auto sales and a dearth of operating funds from its parent firm. It could not meet its payroll on time last month.
The state-run Korea Development Bank (KDB), Ssangyong’s main creditor, said late last month that it would not consider new loans unless Shanghai Automotive extended Ssangyong 320 billion won (US$250 million) of funding first.
In its statement, Ssangyong said it was facing a “serious liquidity crisis” because of the worldwide credit crunch and that losses were mounting in the current climate.
“The operating loss has been widening because of sharp falls in domestic sales and exports as well amid the global economic downturn,” the statement said.
Ssangyong expects to post a net loss of more than 100 billion won for last year.
Its sales reportedly slumped 29.6 percent last year to 92,665 units including 53,500 vehicles shipped abroad.
Its sales last month plunged 52.5 percent from a year earlier to 5,540 units. The board of directors also called for corporate restructuring, including redundancies and wage cuts.
The decision comes as the company’s labor union voted last week on a strike motion and was awaiting the outcome of the board meeting before deciding whether to count the ballots.
CLASH OF WORDS: While China’s foreign minister insisted the US play a constructive role with China, Rubio stressed Washington’s commitment to its allies in the region The Ministry of Foreign Affairs (MOFA) yesterday affirmed and welcomed US Secretary of State Marco Rubio statements expressing the US’ “serious concern over China’s coercive actions against Taiwan” and aggressive behavior in the South China Sea, in a telephone call with his Chinese counterpart. The ministry in a news release yesterday also said that the Chinese Ministry of Foreign Affairs had stated many fallacies about Taiwan in the call. “We solemnly emphasize again that our country and the People’s Republic of China are not subordinate to each other, and it has been an objective fact for a long time, as well as
‘CHARM OFFENSIVE’: Beijing has been sending senior Chinese officials to Okinawa as part of efforts to influence public opinion against the US, the ‘Telegraph’ reported Beijing is believed to be sowing divisions in Japan’s Okinawa Prefecture to better facilitate an invasion of Taiwan, British newspaper the Telegraph reported on Saturday. Less than 750km from Taiwan, Okinawa hosts nearly 30,000 US troops who would likely “play a pivotal role should Beijing order the invasion of Taiwan,” it wrote. To prevent US intervention in an invasion, China is carrying out a “silent invasion” of Okinawa by stoking the flames of discontent among locals toward the US presence in the prefecture, it said. Beijing is also allegedly funding separatists in the region, including Chosuke Yara, the head of the Ryukyu Independence
UNITED: The premier said Trump’s tariff comments provided a great opportunity for the private and public sectors to come together to maintain the nation’s chip advantage The government is considering ways to assist the nation’s semiconductor industry or hosting collaborative projects with the private sector after US President Donald Trump threatened to impose a 100 percent tariff on chips exported to the US, Premier Cho Jung-tai (卓榮泰) said yesterday. Trump on Monday told Republican members of the US Congress about plans to impose sweeping tariffs on semiconductors, steel, aluminum, copper and pharmaceuticals “in the very near future.” “It’s time for the United States to return to the system that made us richer and more powerful than ever before,” Trump said at the Republican Issues Conference in Miami, Florida. “They
GOLDEN OPPORTUNITY: Taiwan must capitalize on the shock waves DeepSeek has sent through US markets to show it is a tech partner of Washington, a researcher said China’s reported breakthrough in artificial intelligence (AI) would prompt the US to seek a stronger alliance with Taiwan and Japan to secure its technological superiority, a Taiwanese researcher said yesterday. The launch of low-cost AI model DeepSeek (深度求索) on Monday sent US tech stocks tumbling, with chipmaker Nvidia Corp losing 16 percent of its value and the NASDAQ falling 612.46 points, or 3.07 percent, to close at 19,341.84 points. On the same day, the Philadelphia Stock Exchange Semiconductor Sector index dropped 488.7 points, or 9.15 percent, to close at 4,853.24 points. The launch of the Chinese chatbot proves that a competitor can
RSS