Mahindra & Mahindra’s woes with SsangYong Motor Company (SYMC) refuse to die down. The deal between Edison Motors Co and Ssang Yong has been terminated after the former failed to deposit the bid amount, as per the terms of the investment agreement. In January, Edison Motors Co had agreed to acquire the debt-ridden Ssang Yong for $254.65 million (₹1,882 crore) through a primary equity investment.

The Korean court had also approved SYMC and Edison Motors signing a merger and acquisition (M&A) investment contract.

Edison-led consortium had asked for a stake of 95 per cent in SYMC against their investment and SYMC had agreed to make best efforts to meet the said request.

“SYMC had informed us today that the Agreement as mentioned above between a consortium led by Edison Motors Co and SYMC to acquire the debt-ridden SYMC through a primary equity investment in SYMC has been terminated by Ssangyong, after consultation with the Seoul Bankruptcy Court, due to Edison’s inability to deposit the bid amount as per the terms of the investment agreement. We are also informed that the Edison Consortium has appealed against the termination of the agreement,” said a statement by Mahindra & Mahindra.

Mounting losses

SYMC has been in court receivership since April 2021. This was preceded by an year-long attempt by M&M to find a buyer for SYMC. Following a hard financial review by the M&M management in view of Covid-19, the company decided against investing any further in SYMC in mid-2020. SYMC had sought infusion of $406 million. M&M took an impairment hit of ₹1,210 crore on the SYMC investment in 2020-21.

The cash-strapped Korean company has posted losses for 19 consecutive quarters and has been struggling to stay afloat. It even sold non-core assets to generate liquidity in 2020, after M&M declined to inject new funds.

Between January and September 2021, SYMC sales crashed 21 per cent to 84,496 units compared with the same period in the previous year. It posted an operating loss of 238 billion won during the same period. With the Edison deal being terminated now, SYMC is perhaps heading for liquidation.

social-fb COMMENT NOW