SsangYong Motor needs acquisition money from Edison Motors to avert delisting Carmaker remains in complete capital erosion

Translated by Kim So-in 공개 2022-01-27 07:59:13

이 기사는 2022년 01월 27일 07:58 더벨 유료페이지에 표출된 기사입니다.

South Korea’s carmaker SsangYong Motor faces high risks of being delisted from the nation’s stock market as it remains in a complete capital erosion.

In a regulatory filing on Tuesday, the company said it has remained in a complete capital erosion. The company recorded total equity of negative 60.3 billion won ($50 million) at the end of 2021, up from negative 88.1 billion won in 2020. Thanks to narrowed net losses, its capital erosion ratio declined from 118% to 108% in the same period. Total liabilities grew 3.6% to 1.92 trillion won.

SsangYong has remained in a complete capital erosion for two straight years due to snowballing operating losses. It has been in the red for five years since 2017 after recording an operating profit of 28 billion won in 2016. The SUV-focused automaker’s sales were less than 3 trillion won in 2020 with an operating loss of 449.4 billion won.

In 2021, the company recorded sales of 2.43 trillion won, down 17.7% year-over-year. Its operating loss was narrowed to 296.2 billion won from the previous year, but it continued to register double-digit operating margin of 15.23%.

The company has stepped up companywide drastic cost-cutting efforts as part of its restructuring measures. Industry sources said it would be best for the carmaker to receive the remaining acquisition money from its new owner Edison Motors. Earlier this month, SsangYong and electric carmaker Edison Motors inked a final deal for the latter’s takeover of the financially troubled carmaker.

The total acquisition cost is said to be 304.8 billion won. If the remaining acquisition cost is paid, SsangYong’s total equity is expected to turn positive to 244.5 billion won. Its capital erosion ratio is likely to fall to around 67% although it will remain in the status of capital impairment.

Industry sources expect Edison Motors to pay the balance before March. SsangYong will avert a delisting from the local stock market if it receives an unqualified opinion on its new financial statement from its auditor and gets approval from the listing and disclosure committee of Korea Exchange. The Korea Exchange granted the company a grace period for improvement until April 14, 2022. (Reporting by Seo-young Kim)
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