이 기사는 2021년 06월 11일 07시37분 thebell에 표출된 기사입니다

South Korea’s SsangYong Motor, which is under court management, has started to reduce the burden of colossal debts ahead of its mergers and acquisitions (M&A) process.

SsangYong Motor’s self-restructuring scheme gained a vote of approval by 52.1% of unionized workers for unpaid leave and a wage cut, according to sources Wednesday.

Half of assembly line workers and 30% of office workers will become off duty for a year. The management and union will re-negotiate and decide whether to continue the program beyond a year depending on vehicle sales. The union promised to stage no strike for years to come.

The ailing automaker is finishing up its process to hire its sale advisors. Accounting firm EY Hanyoug and law firm Sejong submitted their application for a court approval to be selected as sale advisors. After sale advisors are selected, the automaker will start discussions with the court to set up the concrete plans.

Some market watchers said that it was an inevitable decision for SsangYong Motor given the size of its priority debts that have grown since the start of its rehabilitation process. Debts to pay wages and taxes are normally classified as priority debts after entering the rehabilitation proceedings and have to be paid in full first. A company is obliged to repay 100% without any lawsuit or application for seizure.

SsangYong Motor’s priority debts have increased to 700 billion won ($628 million) since it has been put under court receivership last year. SsangYong Motor expects the new self-rescue measures can help it cut fixed costs and ease the financial burden on a new potential investor, industry sources said.

SsangYong Motor previously borrowed 180 billion won from Korea Development Bank using its Pyeongtaek factory site as collateral. The repayment through the sale of the site has been considered the worst possible scenario after the automaker initiated the rehabilitation process. However, some market watchers said that despite the rise in the price of the site, the value of the collateral has practically been lost as the amount of priority debts has increased.

“The company can barely repay priority debts by selling the site,” said an industry source. “It is not possible to provide additional funding unless collateral is secured.”

Market insiders said whether SsangYong Motor will secure the genuine prospective buyer which will be able to inject new capital and get consent from creditors will be the key to the automaker’s revival. (Reporting by Seon-young Kim)