December 17, 2009 / 6:40 AM / 10 years ago

UPDATE 1-Court backs Ssangyong plan, shares briefly halted

SEOUL, Dec 17 (Reuters) - A South Korean court on Thursday backed Ssangyong Motor Co’s (003620.KS) rescue plan, which had been opposed by its majority owner China’s SAIC Motor Corp (600104.SS), the automaker said.

Ssangyong shares rose as much as 14 percent on the report after earlier tumbling the daily limit of 15 percent. The shares were suspended in late afternoon trading and will resume on Friday.

The ruling gives some breathing space to the South Korean automaker, whose already troubled finances were compounded by the global economic slump and an often violent 2-½ month strike which ended in August.

Ssangyong said in a statement that it aimed to return to profit within three years.

The maker of sports utility vehicles turned in an 89.8 billion won ($76.63 million) loss in the third quarter, almost three times the loss in the same quarter last year, while sales plunged to about a third of the year earlier level.

The court verdict will come as a relief to the government, which has made job creation its top priority as Asia’s fourth largest economy emerges from the global crisis.

Ssangyong employs more than 7,000 workers and in September put forward a rescue plan that included a capital writedown that would slash the 51.33 percent stake of its major stakeholder SAIC.

An SAIC spokeswoman in Shanghai said it had no comment on the court decision.

Ssangyong said it sought an initial write 5-for-1 writedown of SAIC’s shareholding with a further writedown planned. Other shareholders would see their holdings written down at 3-to-1 initially, it added. [ID:nSEO195161]

It plans to conduct another 3-to-1 writedown for all shareholders in January.

Ssangyong has been in court receivership since February, leaving SAIC to write off a huge amount of its four-year old investment, the highest profile Chinese overseas auto acquisition to date.

Under the proposal, Ssangyong’s major creditors would swap part of their receivables for new Ssangyong shares. It has total debts of 1.2 trillion won, a company spokesman said.

Ssangyong is seeking to swap 378.5 billion won of that for equity, slightly down from an initial 393.3 billion won. (Additional reporting by Rujun Shen; Writing by Jonathan Thatcher; Editing by Jonathan Hopfner)

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