This file photo provided by SsangYong Motor shows its plant in Pyeongtaek, Gyeonggi Province. (PICTURE NOT FOR SALE) (Yonhap)

SsangYong Motor Co. said Wednesday it has signed a conditional investment agreement with a local consortium ahead of the auction later this month to find a new investor for the automaker.

The Seoul Bankruptcy Court recently selected the consortium led by steel-chemical company KG Group as the preliminary bidder for SsangYong Motor.

The new auction comes two months after local electric bus maker Edison Motors Co. failed to make full payment of 304.8 billion won ($249 million) for the indebted automaker by the date March 25 deadline.

SsangYong and its senior manager, accounting firm EY Hanyoung, accepted the KG-Pavilion PE consortium as the consortium beat others in terms of acquisition price, fundraising plans and job guarantee period.

In the stalking horse bid, the preliminary bidder suggests his price for SsangYong before the auction, and the other bidders submit their prices during the auction. If a company submits a price higher than the price of the bullying horse, SsangYong will ask the bullying horse if it can pay the higher price to buy the automaker.

Last month, four companies – KG Group, Pavilion PE, electrical parts maker EL B&T and underwear company Ssangbangwool – submitted letters of intent to EY Hanyoung. KG and Pavilion PE formed a consortium after submitting letters of intent.

KG Consortium and Ssangbangwool Group reportedly offered auction prices of 900 billion won and 800 billion won, respectively, for SsangYong. The prices are much higher than Edison’s price.

Ssangbangwool said it would participate in the next auction regardless of the preliminary selection of bidders.

The Seoul bankruptcy court has extended the deadline for SsangYong to find a new owner and submit a new restructuring plan by six months until October 15.

SsangYong aims to select a preferred bidder in late June, sign a deal in early July, submit its rehabilitation plan to court in late July and obtain court approval for its restructuring plan in late August.

SsangYong has been in receivership since April 15, 2021, after its Indian parent company Mahindra & Mahindra Ltd. failed to attract an investor amid the COVID-19 pandemic and deteriorating financial situation.

The collapse of the latest deal due to Edison’s failure to make payments marks another setback for the SUV-focused automaker.

The Chinese company SAIC Motor Corp. acquired a 51% stake in SsangYong in 2004, but relinquished control of the automaker in 2009 following the global financial crisis.

In 2011, Mahindra acquired a 70% stake in SsangYong to
523 billion won and now owns a 74.65% stake in the automaker.

The SsangYong range includes the Tivoli, Korando, Rexton and Rexton Sports SUVs. (Yonhap)