Companies

SsangYong Motor CEO quits after failing to secure a strategic investor

Nandana James Mumbai | Updated on April 08, 2021

Mahindra's ailing Korean arm is struggling to find a buyer

Mahindra & Mahindra is expecting interest from other investors for SsangYong Motor Co (SYMC) even as SYMC’s CEO, Byung Tae Yea, quit after failing to find a strategic investor for the ailing company.

“We can confirm that Byung Tae Yea, SYMCs current CEO, has tendered his resignation. The court is managing the restructuring process. We understand that there may be interest from other investors,” Mahindra’s official spokesperson told BusinessLine.

SYMC, Mahindra & Mahindra’s South Korean subsidiary, had filed an application before the bankruptcy court for the commencement of rehabilitation proceedings on December 21, 2020.

Hit by slowdown

SYMC has been scouting for a buyer of M&M’s majority stake ever since the company rolled back plans to infuse fresh funding into SsangYong. In February 2020, M&M had announced a fund infusion of 450-500 billion Korean Won (₹2,700-3,000 crore) to bring SYMC back to profitability by 2022. SsangYong had posted its highest ever yearly loss in 2019 and 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.

However, in April 2020, M&M's Board of Directors held a special meeting to review investment in SYMC and at the same time to discuss the approach to capital allocation in light of the Covid-19 impact. “After lengthy deliberation given the current and projected cash flows, the M&M Board took a decision that M&M will not be able to inject any fresh equity into SYMC and has urged SYMC to find alternative sources of funding,” M&M had said in a press statement then.

Published on April 08, 2021

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