LOS ANGELES — The founder and CEO of HAAH Automotive Holdings, Duke Hale, has formed a new company that intends to make a bid for ailing Korean automaker SsangYong Motor Co., Hale told Automotive News.
HAAH this week announced that it had abandoned plans to import Chinese cars to the U.S. and would file for bankruptcy liquidation. Hale said he could not provide further information on the bankruptcy filing, including the filing date, on advice of legal counsel.
Should Hale’s new investor group be successful in its bid for SsangYong, Hale said that bringing its vehicles to the U.S. and Canadian markets from Korea would likely be part of the business plan for the automaker.
“If we were successful in our acquisition of SsangYong globally, that obviously means we would have the [right to] the U.S. and Canada markets,” Hale said.
Hale’s new Delaware-based company, Cardinal One Motors, will take over HAAH’s yearlong interest in the court process to find SsangYong a new owner. Indian automaker Mahindra and Mahindra said last year that it wanted to sell its majority stake in Korea’s fourth-largest automaker after failing to improve its business prospects.
With no buyer coming forward for money-losing SSangYong, the automaker was put under court receivership, the Seoul Bankruptcy Court said in April. HAAH has been mentioned repeatedly in the Korean media as a possible savior for SsangYong but has also repeatedly missed court deadlines to file a rescue plan.
Hale, in his first comments on a SsangYong bid, said an investor group that he is advising intends to go after the automaker prior to the end-of-July deadline set by the Korean bankruptcy court. The Cardinal One investors will do so under the new legal entity given the demise of HAAH Automotive Holdings, he said.
“Cardinal One Motors has nothing to do with HAAH,” Hale said in an interview Wednesday. “It is a distinctly separate entity and it’s a new entity. And that entity will be in the process of submitting a letter of intent for the acquisition of SsangYong Motors.”
Hale said the SsangYong bid is likely to involve raising $250 million to $350 million, in addition to possible help from Korean financial institutions including the Korean Development Bank. At stake in Korea, Hale said, are about 4,500 jobs.
“We’re positioned in Korea, where maybe if we raise money, we get some more money that would flow into the company,” he said, without identifying where the additional money would come from.
“It’s going to take a significant amount of money and a significant amount of effort,” Hale said. “We did a lot of due diligence on this deal. We’ve had people and outside companies evaluating SsangYong since July of last year. This is not some casual interest. We’ve been involved for 12 months now.”
Although SsangYong has been losing money, Hale said he sees great potential for the Korean brand, which is present in dozens of global markets but not in the U.S. and Canada. Unlike the difficult situation with Chinese auto brands, Korean vehicles don’t face tariffs because of its free-trade agreement with the U.S.
“You don’t have the big tariff problem,” Hale said in comparing the prospect of Korean imports to Chinese auto imports, which carry a 27.5 percent tariff. “You have great relations between Korea and the U.S. It’s a different ballgame. And Korean quality is seen by the American consumer as very good.”
SsangYong, however, has been troubled for many years and has been losing money, prompting Mahindra’s exit.
According to Reuters, SsangYong’s 2020 operating loss widened to 449 billion won ($401.76 million) from 282 billion won a year earlier. Revenue fell 19 percent to 3 trillion won.
Mahindra, which owned 75 percent of SsangYong as of the end of last year, bought SsangYong when the South Korean automaker was near bankruptcy in 2010 but has struggled to turn it around.
Read More: Auto News