SHANGHAI, China — SAIC, China's biggest carmaker, may have less control in Ssangyong Motor after the troubled Korean company proposed to cut its stake by 80 percent.
In a turnaround plan proposed this week as part of court receivership proceedings, Ssangyong said it hopes to cut SAIC's holdings to 11 percent from 51 percent.
The company, which is based in Pyeongtaek, South Korea, was put into receivership in February after sales of its sport-utility vehicles plunged amid the global slump in the auto industry.
Ssangyong also plans to repay $1 billion in debt over the next 10 years and convert some of that debt into new equity.
Industry analysts in China said the reduced stake would provide a good exit for SAIC to quit the money-losing unit.
"SAIC has a well-developed product portfolio and quitting Ssangyong won't cause big problems for its financial performance in the long term," said Wang Liusheng, an analyst with Merchants Securities.
SAIC, the Chinese partner of General Motors and Volkswagen, paid about $500 million for a 49 percent stake in Ssangyong in 2004, marking the first major overseas acquisition for a Chinese carmaker. It subsequently increased its stake to 51 percent but relinquished management control earlier this year when Ssangyong was placed in receivership.
The investment has been fraught with problems. Ssangyong's labor union accused SAIC of stealing technology and refused to accept a proposed survival plan earlier this year that called for slashing jobs by 36 percent.
Inside Line says: It may be time for SAIC to withdraw from Ssangyong, which is still trying to map a revival strategy. — Vivian Jin, Correspondent
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