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(LEAD) Ssangyong Motor seeks court receivership on deteriorating finances
SEOUL, Jan. 9 (Yonhap) -- Ssangyong Motor Co., the South Korean unit of China's Shanghai Automotive Industry Corp. (SAIC), said Friday it is seeking court receivership due to the company's worsening finances.
Ssangyong filed its application for protection from creditors with the Seoul Central District Court to normalize its operations, the company said in a statement.
The application comes after Ssangyong's SAIC-led board concluded a meeting in China. No plan for layoffs or financial support from SAIC was announced, but Ssangyong will cut costs throughout voluntary retirement and paid leave, according to the statement.
"Shanghai Automotive will continue to take responsibility as the main shareholder," said Chung Mu-young, a Ssangyong spokesman, asked whether SAIC would exit from the ailing automaker.
Ssangyong, which is 51 percent owned by China's Shanghai Automotive Industry Corp., is rapidly bleeding cash and may face liquidation unless it receives a hefty supply of capital from its Chinese parent.
SAIC has reportedly demanded Ssangyong slash nearly half of its factory workers in return for financial assistance.
Ssangyong's 5,200-strong labor union has said it has zero-tolerance for the reported restructuring plan and threatened to strike if SAIC demands job cuts.
SAIC has been under pressure from South Korea's state-run Korea Development Bank, the main creditor of Ssangyong, to provide fresh capital to the troubled affiliate. KDB says that only after such a move would it consider extending loans to Ssangyong.
SAIC bought a 51 percent stake in Ssangyong for $500 million in 2004, marking the first direct investment by a Chinese company in a local manufacturer.
The acquisition has often been marred by conflicts with the union, which has accused SAIC of stealing Ssangyong's car-manufacturing technology and failing to honor its investment pledge.
Ssangyong reported a net loss of 98 billion won ($73.8 million) in the January-September period last year, hit by slumping sales. Ssangyong is burning through 25 billion won in cash every month, analysts say.
As of last November, Ssangyong had 877 billion won in interest-bearing debts, with total liabilities in excess of 1.46 trillion won, according to the company's filing with the stock exchange.
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