Mahindra arm Ssangyong misses repayment of loans worth ₹408 cr

Nandana James Mumbai | Updated on December 15, 2020

Mahindra & Mahindra’s South Korean subsidiary, Ssangyong Motor Co (SYMC), has missed repayment of loans aggregating to around 60 billion won, or ₹408 crore, which were due and payable on December 14, 2020, M&M said in a regulatory filing on Tuesday.

SYMC has outstanding loans aggregating to 100 billion won, or about ₹680 crore.

Of the total outstanding, which are covered under commitments made by the company to the bankers of SYMC, around 60 billion won (₹408 crore) is owed to JP Morgan Chase Bank, Seoul, 10 billion won (₹68 crore) to BNP Paribas, Seoul, and 30 billion won (₹204 crore) to Bank of America, Seoul.

SYMC has missed repayments of the following loans aggregating to nearly 60 billion won (₹408 crore), which were due and payable on December 14:

JP Morgan: Principal of around 20 billion won (₹136 crore) and interest of 0.02 billion won ( ₹0.13 crore)

BNP Paribas: Principal of nearly 10 billion won ( ₹68 crore) and interest of 0.01 billion won (₹0.07 crore)

BoA: Principal of about 30 billion won (₹204 crore) and interest of 0.03 billion won (₹0.19 crore)

“Whilst the company has made a commitment to cover the above-mentioned loans given by the banks, its final liability will be limited to the extent not recovered from SYMC,” said M&M.

On the payment of the dues from the company to the banks, M&M will be subrogated to all the rights of the banks against SYMC and it will step into the shoes of the banks as creditor, entitled to all the rights the banks had against SYMC with respect to these loans, it added.

SYMC has begun scouting for a buyer of M&M’s majority stake in it. This is part of M&M’s strategy to exit from loss-making subsidiaries and underperforming businesses. The move came after M&M rolled back plans to infuse fresh funding into SsangYong.

In February, it had announced a fund infusion of 450-500 billion won (₹2,700-3,000 crore) to bring its South Korean subsidiary back to profitability by 2022. SYMC had posted its highest ever yearly loss in 2019. The lockdown worsened the situation for the South Korean company. The slowdown in automobile sales also impacted M&M’s ability to support its foreign partner.

Published on December 15, 2020

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