Lanxing, Ssangyong Motors to Sign MOU on Takeover

Seoul December 22, 2003; Bae Keun-min writing for the Korea Times reported that creditor banks of Ssangyong Motors and China's Lanxing Group will sign a memorandum of understanding (MOU) regarding the sale of the South Korean sports utility vehicle (SUV) maker on Monday in Seoul.

The creditors, including Chohung Bank, confirmed their decision late last Friday with the approval of 90 percent of them in writing, and reported it to their Chinese counterpart. The 90-percent approval was well above the minimum requirement of 75 percent.

With the pending sale, Ssangyong will become the third Korean automaker to be sold to foreign capital, following Samsung Motors and Daewoo Motors. Except for Hyundai and Kia Motors, three out of the five local automakers will be foreign-owned.

Also, the sale will mark the second case in which a Chinese firm has bought out a major Korean company since China's BOE Group bought Hynix Semiconductors' TFT-LCD unit in last November.

Officials from Ssangyong Motors' main creditor, Chohung Bank, and Lanxing will attend the MOU meeting at the Grand Hyatt with Samil Accounting Corp., in charge of due diligence on Ssanyong.

Lanxing will investigate Ssangyong's financial status, including assets and debts, over the coming three weeks to make a bidding price at the end of January. If the creditors are not satisfied with the bidding price, they may take steps to renegotiate it in February.

The two parties are expected to wrap up the deal in March.

Last Tuesday, the creditors provisionally selected the Lanxing Group the priority negotiator for the sale of the SUV maker. Lanxing proposed to take over a 55.4 percent stake in Ssangyong Motors at 11,000 won per share.

Last week, there were unfounded rumors that Lanxing has lost its priority for the bid as foreign news media reported that the Shanghai Auto International Corp. received approval to be the sole bidder for the sale from the Chinese government.