Mahindra-owned SsangYong Motor files receivership after missing loan repayment
SsangYong Motor has requested the court’s receivership proceedings because a massive disruption of the operation is expected after the company was unable to reach an agreement to extend repayment terms on its loans with foreign banks.
SsangYong Motor defaulted on a 60 billion Won (Rs. 408 crore) loan on December 14, 2020
South Korean Mahindra-owned SUV maker SsangYong Motor Company has filed for receivership after defaulting on a loan of around 60 billion won or 408 crore to three different banks. In a case at the Bombay Stock Exchange (BSE), Mahindra said that SsangYong had applied for the initiation of rehabilitation proceedings in Seoul Bankruptcy Court under South Korea’s Debtor Rehabilitation and Bankruptcy Act. The South Korean company also requested an Autonomous Restructuring Assistance Program (ARS), a court-designed process. We have reached out to Mahindra for further details on the matter, but have yet to receive an official response from the company.
Likewise, in Korea, SsangYong, in its statement, “SsangYong Motor requested the receivership proceedings, as a massive disruption of the transaction is expected after the company was unable to reach an agreement to extend its loan repayment terms with the foreign banks. ” The company defaulted on loan repayments to three different financial institutions – around 20 billion Won (₹ 136 crore) to JP Morgan, 10 billion Won (₹ 68 crore) to BNP Paribas and 30 billion Won (204 crore) to Bank of America. Total payment was due December 14, 2020.
In his ESB file, Mahindra said: “If the court approves the ARS, the SYMC will continue to operate under the supervision of its board of directors and will negotiate with stakeholders to reach agreement on a stimulus package that could include equity financing. and debt and other related actions. its decisions will be subject to the approval of the Court. “The program will give SsangYong up to three months to negotiate with stakeholders, including creditors, to resolve the issues, delaying the court decision.
SsangYong is burdened with high debt, and its vehicle sales between January and November fell to 96,825, down more than 20% from the previous year, according to the automaker’s record. SsangYong’s total outstanding loans amount to 100 billion won, or about ₹ 680 crore. Mahindra has been looking since June for a buyer for all or most of its 75% stake in SsangYong, which it bought in bankruptcy in 2010, but has struggled to recover.
Commenting on the situation, the South Korean Ministry of Commerce said in a statement, “Regardless of SsangYong’s request for receivership, negotiations of the SsangYong sale agreement are still ongoing.” Mahindra & Mahindra shares fell 3.3% in their biggest drop in eight weeks, while SsangYong closed 19.2% against a 0.2% rise in the broader KOSPI market.