Ssangyong Motor, a Mahindra Group company, has announced the receipt of the full payment of South Korean Won (KRW) 80 billion (about Rs 400 crore) for new preferential shares allotted to its majority shareholder Mahindra & Mahindra Group and that the paidin capital increase was successfully completed.

Ssangyong Motor had decided to make a third party allotment (preferential offer) to Mahindra on February 14 to secure investment funds for new products.

The most recent increase in the paid-in capital results from approximately 14.5 million new shares (capital increase ratio of 11.9 per cent).

The new shares will be locked up for one year, and the expected listing date is scheduled for June 7. After this, Mahindra’s shareholding ratio in Ssangyong Motor will increase from 69.63 per cent to 72.85 per cent. Apart from the KRW 80-billion paid-in capital, Mahindra has agreed to roll over the corporate bond worth KRW 95.4 billion that was scheduled to mature in 2014, by another year.

This is an additional source of fund for Ssangyong Motor.

Following the paid-in capital increase, Ssangyong’s new product development such as the small CUV, which will be launched in 2015, will gain momentum and the company’s debt ratio will decline.

In 2011, Mahindra invested KRW 522.5 billion to acquire 70 per cent of Ssangyong Motor Company, and since the acquisition, the Ssangyong Motor Board has approved a total investment of around 500 billion won until now.

Lee Yoo-il, CEO of Ssangyong Motor said: “The 80-billion won paid-in capital for stock has been received, and the paid-in capital increase has been completed,” adding that as the funds had been secured the company will proceed with investments for new product development such as small engines and small CUV.

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