Ssangyong Motor shares have been designated as a management item for the first time in 11 years. This is because Samjung Accounting Corp., which is in charge of auditing Ssangyong Motor, refused to submit its audit opinion on the second-quarter report. Concerns are rising that Ssangyong Motor is at the crossroads of life and death.
The Korea Exchange announced on Aug. 14 that it has designated Ssangyong Motor shares as a management item. As a result, trading will be suspended from 3:19 p.m. until the opening of the stock market on Aug. 19.
A listed company is designated as a management item if its semi-annual report, which is prepared every six months, receives an unqualified audit opinion (limited, inappropriate or rejected) from an accounting firm.
"The question is raised as Ssangyong continues to be a company, with its current liabilities exceeding liquid assets by 462.4 billion won ($388.5 million)," Samjung Accounting Corp. said.
Amid predictions that if Ssangyong fails to secure liquidity solutions or new investors, the state-run Korea Development Bank, its main creditor, will apply for corporate rehabilitation procedures, rumors of a crisis are spreading further as it has been designated as a management item.
Ssangyong Motor's future is narrowed down to roughly three scenarios. The first is to find a new investor and seek a breakthrough.
The second is that the government intervenes in the issue and acquires a stake in Ssangyong Motor. Or it seems that Ssangyon will have no choice but to go back to court receivership.
Previously, Ssangyong Motor's major shareholder, Mahindra, decided to seek new investors by lowering its stake of 74.75 percent, but the new investors have yet to be seen.
The search for new investors became official in June, but the actual timing can be seen as April when the company announced the withdrawal of 230 billion won ($193 million) in investment in Ssangyong Motor. It has been three or four months since it was put up for sale, but mergers and acquisitions have been slow.
