Seoul  - Ailing South Korean carmaker Ssangyong Motor Co said Tuesday it plans to scrap most of the shares held by its Chinese majority shareholder in a bid to save the company.

If creditors and shareholders agree, Shanghai Automotive Industry Corp's 51.33-per-cent stake is to be reduced in a first step to 11.2 per cent.

Ssangyong, the smallest of South Korea's five carmakers, also plans to convert debts worth 393 billion won (321 million dollars) into new shares as part of a plan to pay back its 1.23-trillion-won debt within the next 10 years.

According to Ssangyong's turnaround plan, shares held by minority shareholders are to be cancelled at a ratio of three shares to one. The SUV-maker has been under court bankruptcy protection since February. The Seoul bankruptcy court said it would review the plan together with creditors and shareholders.

Ssangyong's survival is far from ascertained, as its major creditor, the state-run Korea Development Bank refused to provide additional funding for the carmaker to develop a new model.

The carmaker has laid off 2,130 employees, a third of its staff. In the first eight months of the year, sales dropped by 78 per cent to 15,103 units. (dpa)