KG gains upper hand over SBW in bid for SsangYong Motor

A SsangYong Motor factory in Pyeongtaek, Gyeonggi Province / Korea Times file

By Park Jae-hyuk

Cash-rich KG Group appears to be moving closer to winning the bid to acquire SsangYong Motor for about 1 trillion won ($814 million), as its main competitor, SBW Group, is facing difficulties looking for brokerages and accounting firms to help with its acquisition, according to industry officials, Friday.

Earlier this week, KB Securities retracted its plan to join with Eugene Investment to help SBW raise 450 billion won for its acquisition of the cash-strapped carmaker.

Although it was reported on Thursday that SK Securities would take over for KB Securities, an SK Securities official denied the news a day later, saying it does not have any plans to send a letter of intent (LOI) to SBW.

Samil PwC also denied SBW's announcement that it had been hired as a financial adviser for the acquisition deal.

"We have never signed a contract with SBW," a Samil PwC spokesperson said, adding that SBW had issued a press release claiming so "unilaterally" earlier this month.

Both KB Securities and Samil PwC are said to have decided to stay away from the deal to avoid potential risks.

Last week, Financial Supervisory Service Governor Jeong Eun-bo indicated that the financial watchdog will tighten its monitoring of companies participating in the bid for SsangYong Motor, in order to prevent them from making unfair profits from fluctuations in their stock prices.

His warning was viewed as a response to public criticism against SBW, which sold off shares in its affiliate immediately after their stock prices rose in response to the announcement of its participation in the bid.

Other brokerages and accounting firms are therefore expected to avoid joining hands with SBW.

Amid the growing skepticism, SBW said it could acquire SsangYong Motor with money from companies participating in a consortium led by the group, as well as with 120 billion won it had raised previously to purchase Eastar Jet.

However, the combined sales of the group's seven listed affiliates stood at 632.1 billion won last year, much lower than the carmaker's annual revenue of 2 trillion won.

On the other hand, KG Group's de facto holding firm, KG Chemical, has 360 billion won available for the purchase.

The group is also supposed to receive 500 billion won during the second half of this year for the recent sale of KG ETS.

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