Ssangyong Motor of South Korea said it had received full payment of 80 billion Korean won (Rs.400 crore) from its majority shareholder Mahindra & Mahindra Group in lieu of the new shares offered to the Indian company. The 80 billion won paid-in capital for stock has been received, and the paid-in capital increase has been successfully completed,” Lee Yoo-il, CEO of Ssangyong Motor, said. With this, Mahindra’s shareholding in Ssangyong Motor will increase from 69.63 per cent to 72.85 per cent.
“As we have secured the funds, we will vigorously proceed with our investments for new product development such as small engines and small CUV and make utmost efforts for an early turnaround of the company and improve the corporate value,” the CEO said.
Ssangyong Motor decided to make a third party allotment (preferential offer) to Mahindra on February 14 to secure investment funds for new products.
Apart from the 80 billion won paid-in capital, Mahindra has agreed to roll over the corporate bond worth 95.4 billion won that was scheduled to mature in 2014, by another year. This is an additional source of fund for Ssangyong Motor. With this, the company expects more tangible results from synergy in various areas of sales and sourcing.
In 2011, Mahindra had invested 522.5 billion won to acquire 70 per cent stake in Ssangyong Motor Company.
Since the acquisition, Ssangyong Motor board has approved a total investment of 500 billion won until now, which includes 295.8 billion won investment for small-sized new engine development and CUV development projects.
Mahindra’s shareholding in Ssangyong Motor will increase from 69.63 per cent to 72.85 per cent