A South Korean consortium led by local electric carmaker Edison Motors Co. has been selected as the preferred bidder to acquire SsangYong Motor Co., the company said Thursday.

SsangYong and the court-appointed lead manager EY Hanyoung accounting firm submitted an official document for the selection of the Edison consortium for the debt-laden carmaker last week and the court approved the preferred bidder early this week, a company official said over the phone.

SsangYong and EY Hanyoung will sign a memorandum of understanding with the Edison consortium for the deal on Monday, the official said.

The Edison consortium submitted the acquisition price of 310 billion won for SsangYong and has to pay 15.5 billion won, or 5 percent of it, to the carmaker on Monday, he said.

In the follow-up steps, the Edison consortium is scheduled to conduct a two-week due diligence on SsangYong next month and then sign a deal to acquire the SUV-focused carmaker.

It is estimated that up to 1 trillion won ($850 million) is needed to take over SsangYong and then pay its debts.

In September, three bidders, which also included Los Angeles-based EV maker INDI EV, Inc., joined the auction to acquire SsangYong.

Edison Motors has said it will set up a special purpose company to raise 800 billion won to 1 trillion won to acquire SsangYong and increase capital starting next year by issuing new shares to achieve a turnaround within three to five years.

The electric bus and truck maker said it aims to transform the SUV-focused SsangYong into an EV-focused carmaker in the next decade in line with changes in the automobile market.

It plans to produce 10 new EV models, including the Smart S, by 2022, 20 by 2025 and 30 by 2030.

In April, SsangYong was placed under court receivership for the second time after undergoing the same process a decade earlier. Its Indian parent Mahindra & Mahindra Ltd. failed to attract an investor due to the prolonged COVID-19 pandemic and its worsening financial status.

Court receivership is one step short of bankruptcy in South Korea's legal system. In receivership, the court will decide whether and how to revive the company.

China-based SAIC Motor Corp. acquired a 51 percent stake in SsangYong in 2004 but relinquished its control of the carmaker in 2009 in the wake of the 2008-09 global financial crisis.

In 2011, Mahindra acquired a 70 percent stake in SsangYong for 523 billion won and now holds a 74.65 percent stake in the carmaker.

In the January-August period, SsangYong's sales fell 17 percent to 61,854 vehicles from 74,707 units a year earlier. Its lineup consists of the Tivoli, Korando, Rexton and Rexton Sports SUVs.

In self-help measures, SsangYong's 4,700 employees began to take two-year unpaid leave in rotation on July 12 while accepting an extension of a cut in wages and suspended welfare benefits until June 2023.

The company also plans to sell its current Pyeongtaek plant, 70 kilometers south of Seoul, in three to five years and build a new factory in the same city to focus on electric vehicles. (Yonhap)