SEOUL -- Creditors of South Korea's Ssangyong Motor on Friday picked China's Shanghai Automotive Industry Corp. as preferred bidder to buy a $360 million majority stake in the sports utility vehicle maker.
Ssangyong has been up for sale since creditors took control of the debt-ridden Korean auto maker in 1999, when its parent Daewoo Group failed under a mountain of debt.
Shanghai Auto (SAIC) is General Motors' main Chinese partner. In 2002, GM, Shanghai Auto and Japan's Suzuki Corp. bought control of South Korea's Daewoo Motors.
State-owned SAIC also has a large joint venture with Volkswagen AG and is currently considering listing its entire business, possibly overseas.
An official at Ssangyong's main creditor, Chohung Bank, said Shanghai Automotive was named the preferred negotiating partner to buy a 48.9 percent stake in Ssangyong, worth 417.8 billion won ($359.4 million) based on Thursday's closing share price.
Analysts viewed the choice as a win-win.
"For Ssangyong, the deal could help it establish a much-needed bridgehead for sales in China," said Song Sang-hoon, auto analyst at Hyundai Securities.
"And Shanghai could make a foray into the lucrative SUV segment with the help of Ssangyong's advanced technology."
Creditors would sign a binding pact with the Chinese auto maker on Tuesday, Chohung Bank said.
The stock remained under pressure due to an ongoing partial strike by Ssangyong's 5,600-member union, which began strike action on July 12 to push for higher wages and job security.
"We will ask for tripartite negotiations involving creditors, the buyer and the union," said a union spokesman. "We are also preparing detailed union demands for the sale."
"Shanghai Automotive had the highest score on prices, other takeover terms, and post-acquisition development plans based on a close study of takeover proposals from several candidates," Chohung Bank said in a statement.
"Creditors held talks with Shanghai Automotive on takeover terms before signing a memorandum of understanding and both sides agreed on July 22 on MOU terms," the statement said.
A U.S. pension fund had the second highest score and would be granted a chance to negotiate in case talks with Shanghai Automotive fell through, Chohung said.
"Talks are still continuing. We're waiting for the final word from the Koreans," an SAIC spokeswoman said, declining to give further details.
A deal to sell the troubled auto maker to Chinese state chemicals firm Blue Star collapsed in March over price differences.
Ssangyong, which builds Rexton, Korando and Musso SUVs as well as luxury Chairman passenger cars, has annual capacity to produce 200,000 vehicles and plans to double production by 2007.
The South Korean car maker has a market value of $751 million, but is wallowing in 1.32 trillion won of debt. Its net profit jumped 84 percent last year to 589.6 billion won on cost cutting measures and robust sales.