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SKorean bank turns down new loan to Ssangyong Motor
Seoul (AFP) Dec 26, 2008 The Korea Development Bank (KDB) said Friday it would not provide Ssangyong Motor Co. with new loans unless its Chinese parent company helps the ailing automaker first. The state-run KDB, Ssangyong's main creditor, said Shanghai Automotive Industry Corp. should extend 320 billion won (250 million dollars) of emergency funding to Ssangyong before it will consider providing new loans. The 320 billion won includes 120 billion won Shanghai Automotive should already have paid Ssangyong for technology transfer, a KDB spokesman said. Shanghai Automotive also needed to offer repayment guarantees worth 200 billion won in order for Ssangyong to take up loans already promised by two Chinese banks, the KDB spokesman said. "We've reached a conclusion that Shanghai Automotive must provide help first," the spokesman said. "Only after that will we consider injecting new money," he said. Shanghai Automotive, however, wants KDB to open a new a line of credit and has demanded Ssangyong make wage cuts and redundancies -- a move strongly opposed by the labour union. The Chinese owner has reportedly threatened to abandon the troubled automaker unless its demand is met. Ssangyong CEO Choi Hyung-Tak reportedly said the Chinese parent may decide to pull out in January. Choi said Ssangyong, the country's smallest carmaker, could face a critical period early next year when a massive amount of debt matures. For the third quarter Ssangyong, acquired by Shanghai Automotive in 2004, posted a net loss of 28.2 billion won, the fourth consecutive quarterly loss. The company says it expects a net loss of more than 100 billion won this year due to a slump in demand. Ssangyong halted production for two weeks from December 17 and said it would be unable to pay workers on time this month due to a lack of funds. Related Links Car Technology at SpaceMart.com
Thompson Files: Wisdom on the bailout
Arlington, Va. Dec 23, 2008 Like Ebenezer Scrooge awakening on Christmas morning to the error of his ways, U.S. President George W. Bush has belatedly discovered the danger of relying too much on market forces. |
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