Mahindra Group, the largest shareholder of SsangYong Motor, stated that it would find a new co-investor by increasing capital through issuance of new shares, rather than selling its shares.
Mahindra delivered a message to SsangYong Motor that it has no intention of selling its shares of the South Korean auto maker but instead seeks to keep assisting it in finding a new investor, SsangYong said on Sunday. The Indian firm intended to deny the claims that it would opt for an out from SsangYong Motor by selling its shares or 74.65 percent of the total as the South Korean carmaker chose Samsung Securities and its global partner Rothschild as a lead manager to find a new investor.
Mahindra’s decision seems to have been made considering that selling its stakes will not be an easy job for now. As of late March, SsangYong Motor has 389.9 billion won in loans, the maturity dates of which arrive within less than a year. It borrowed 40 billion won, 47 billion won and 29.9 billion own from foreign creditors - JP Morgan, BNP Paribas and Bank of America, respectively. The loans go with some strings attached: Mahindra must own more than 51 percent of the total shares. Under these circumstances, it is hopefully expected that the loans could be extended if Mahindra holds its current shares and successfully increases capital by issuing new shares.
Nevertheless, Mahindra’s explanation does not seem to completely quell market doubts that it may leave SsangYong. Anish Shah, vice president of Mahindra, answered to SsangYong that Mahindra could sell its shares to a new investor if the new shareholder wants so, only adding weight to such a doubtful outlook.
Hyung-Seok Seo email@example.com