STRUGGLING SSANGYONG AWAITS COURT'S RULING ON SURVIVAL PLAN

A South Korean court is set to make a decision Friday on whether to approve a turnaround plan by beleaguered Ssangyong Motor Co., which has been under bankruptcy protection since February, company officials said.

Ssangyong, majority owned by China's Shanghai Automotive Industry Corp., submitted the plan to the Seoul Central District Court last month, saying it would cut the Chinese parent's holding to 11.2 per cent from 51 per cent and repay its 1.23 trillion won (US$1.04 billion) in debt over the next 10 years.

The plan also calls for Ssangyong, the smallest carmaker in South Korea, to write off some of its debts. Unless the court accepts the plan, Ssangyong will likely be liquidated.

Chung Mu-young, a spokesman at Ssangyong, said the approval hinges on whether foreign creditors agree to the rehabilitation plan.

"Whether or not the foreign creditors agreed on the plan is key for the court's decision," Chung said. The spokesman added the court may delay a decision if there is a disagreement among the foreign creditors.

Ssangyong became the first major corporate victim in South Korea of the global economic crisis, as the slump hit sales of new cars last year.

But some critics have accused Shanghai Automotive of failing to live up to its investment plan and "stealing" technology from Ssangyong, which specializes in sport-utility vehicles.

Ssangyong's woes deepened in summer as hundreds of dismissed workers occupied the company's only plant for more than two months to protest massive layoffs. As part of the turnaround plan, Ssangyong slashed about 30 per cent of its workforce, or 2,130 jobs.

If the court approves the turnaround plan, Ssangyong's court-appointed managers say they would sell most of Shanghai Motor's stake to other foreign investors to survive on its own.

But many analysts say Ssangyong has a long way to go to revive its business because of its gas-guzzler line-up and tattered image from the strike.

In the first half of this year, Ssangyong's net loss reached 443 billion won. Sales also plunged 66 per cent to 455 billion won with its operating loss totaling 153 billion won.

Shares of Ssangyong Motor jumped 10.93 per cent to 3,095 won as of 9:21 a.m. in Seoul on speculation that the court may accept the company's turnaround plan.

(Yonhap) cg

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