This story is from December 22, 2020

Mahindra arm Ssangyong applies for bankruptcy

Mahindra arm Ssangyong applies for bankruptcy
Chennai: 10 years after Mahindra paid $464 million for a majority stake in Ssangyong Motor, the South Korean company has filed for bankruptcy after defaulting on loan repayments. Earlier this year, Mahindra & Mahindra (M&M), which holds 75% stake in the company, had said that it was freezing investments in Ssangyong. It was looking to reduce stake and discussions were on with potential investors.
In a BSE filing, M&M said Ssangyong has “intimated to the Korean stock exchange, about filing an application for commencement of rehabilitation procedure with the Seoul bankruptcy court under the Debtor Rehabilitation and Bankruptcy Act of South Korea”.Last week, Ssangyong had defaulted on loan dues worth Rs 408 crore to lenders including JP Morgan, BNP Paribas and Bank of America (BoA).
The payments were due on December 14. Ssangyong’s total default amount included approximately Rs 136 crore principal and Rs 13 lakh interest to JP Morgan, around Rs 68 crore principal and Rs 7 lakh interest to BNP Paribas and about Rs 204 crore principal and Rs 19 lakh interest to BoA. The loan default came at a time when M&M was in talks with American auto retailer HAAH Automotive for a stake sale in Ssangyong.
“Ssangyong has also applied for an autonomous restructuring support (ARS) programme, which is a court-designed process,” said M&M’s BSE filing. “If the court approves the ARS, Ssangyong will continue to function under the supervision of its board and will negotiate with stakeholders to reach an understanding about a revival package, which may include equity and debt financing and other related actions,” added the statement. Ssangyong has outstanding loans worth around Rs 680 crore. Mahindra has invested over $100 million in the company since takeover. Ssangyong was a bankruptcy-protected asset and M&M was chosen as the preferred bidder from a host of offers. M&M’s share price on the BSE closed over 6% down on Monday at Rs 686.
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