M&M in talks with an investor for majority stake sale in Ssangyong, looks for buyers, Auto News, ET Auto

NEW DELHI: Mahindra & Mahindra (M&M), which obtained Ssangyong Motor Organization (SMC) in 2010, is looking for traders to promote a bulk stake of all over 70{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} in the Korean automaker, a prime official said in a push convention today.

SMC has unsuccessful to pay out back again its money owed to its creditors on time. The business filed for court receivership on December 21, 2020.

Pawan Goenka, managing director, Mahindra & Mahindra, said, “We are in really serious discussion with an investor to commit in SMC for a bulk stake. We hope to conclude the phrase sheet by upcoming week”

“SMC was not ready to meet up with its obligations for credit card debt payment to some of the overseas financial institutions and then to KDB and hence had to apply for chilly receivers. And alongside with chilly receiver sip, Ssangyong also requested the court for a little something that is identified as ARS, and below a plan, the court gives approval to the business to discover a option on their individual and gives a time body. And for the duration of this time, the business is managed by the business management and the court does not intervene. So the court has granted the ARS and the day for that is February 28, 2021. That means we have two more months to conclude the deal with the investor.”

If the deal concludes, Mahindra will give away the bulk ownership and will be a insignificant shareholder of 30{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} or significantly less. The business will also do a 25{0764260a27b4b31ca71a8adf79c3ae299a61e6f062052eee3f0df84ce9b30ade} capital reduction which is permitted below RBI regulation.

Anish Shah, group president (strategy) for the Mahindra Team, said, “The board had determined not to fund SMC further than forty billion received that we invested in April and May. At this position, we’re optimistic that you can find a great opportunity that a consumer could come in and proceed Ssangyong. If that does not come about, then the business would go by way of pre-packaged rehabilitation, and there could be other possibilities for that as well. But in possibly state of affairs, M&M would stop to be a bulk shareholder by the end of this fiscal yr. And that is a little something that we are dedicated from a capital allocation standpoint.”

Even with many makes an attempt by M&M to change all over functions of Ssangyong Motor Organization, the Korean carmaker has been reporting losses for 15 consecutive quarters and battling to pay out back again its money owed. It even sold non-main belongings to crank out liquidity previously this yr, right after M&M declined to inject new resources.