SsangYong Motor's major stakeholder Mahindra&Mahindra announced that it will complete the sale of its shares of the South Korea-based automobile manufacturer by the end of the next month.
Mahindra Managing Director Pawan Goenka said in an online press conference on Friday (local time) that Mahindra Group has been in negotiations with a potential investor, expecting that a “term sheet” will get done next week, according to India's leading business magazine Business Today on Sunday. A term sheet is a written agreement by Mahindra and the investor to state major deal conditions only when they reach considerable agreement. Mr. Goenka did not disclose who the “potential investor” is.
Acquiring SsangYong Motor in 2011 for 522.5 billion won, the largest stakeholder suffered a mounting deficit to suspend additional investment in SsangYong Motor in April last year, followed by its declaration to forgo its status as the No. 1 stakeholder two months later. As there was little progress in investment negotiations throughout last year between Mahindra Group and HAAH Automotive Holdings, a U.S. automobile distributor, SsangYong Motor ended up with an overdue debt and receivership on Dec. 21 last year. As a result, SsangYong Motor is given a time period for autonomous debt restructuring with its debt left frozen by Feb. 28 based on the Autonomous Restructuring Support program approved by the Seoul Bankruptcy Court right after the company applied for legal management.
Once a deal is made with the “potential investor,” Mahindra Group will give up on the right to management and step down as the largest shareholder by reducing its stake of 70 percent to less than 30 percent. By contrast, a no-deal situation will bring about a second court receivership to SsangYong Motor in 12 years since 2009, putting the company at a crossroads between normalization and liquidation.
Hyung-Seok Seo email@example.com