19-SEP-2009 Ssangyong Motor Co. will cancel most shares owned by its Chinese parent Shanghai Automotive Industry Corp. as part of a turnaround plan submitted to a bankruptcy court, the company said in a statement Tuesday.

The plan also calls for Ssangyong to convert 393 billion won ($321.5 million) in debts into new shares.

But the future of the automaker remains uncertain as its main creditor, the state-run Korea Development Bank (KDB), has refused to provide further support, Yonhap News reportedd.

Ssangyong, South Korea's troubled smallest carmaker, entered bankruptcy protection in February after its largest shareholder, China's Shanghai Automotive, which has a 51 percent stake in Ssangyong, abandoned the loss-making affiliate.

As part of restructuring efforts, Ssangyong had planned to cut 2,646 workers, or 36 percent of its workforce. About 1,700 employees left the company through voluntary retirement packages, but the remaining workers occupied the carmaker's only assembly plant for 77 days beginning in mid-May to protest the massive job-cuts.

The occupation, marked by periodic violence, ended on Aug. 7 and further darkened prospects for Ssangyong's survival, costing the company 316 billion won in lost production.
Hit by the strike, Ssangyong's net loss widened to 177.1 billion won in the April-June period. Sales for the same period plunged 66 percent to 221.7 billion won.

Ssangyong is said to have total liabilities valued at 1.25 trillion won.