Indian automaker Mahindra and Mahindra (M&M) intends to sell a part of its stake in the struggling South Korean car company SsangYong by February, according to media reports.
Mahindra expects to sign a non-binding agreement for the stake sale in the next week and complete the deal by Feb 28. The Indian company had two months before the South Korean carmaker was put into a rehabilitation program. Mahindra holds a 75pc stake but wants to reduce it to just 30pc.
SsangYong’s financial performance has been deteriorating since 2017 and stressing the Indian stake holder’s books.
SsangYong Motor filed for bankruptcy in Dec 2020 with an outstanding loan aggregation to KRW100bn ($90mn).
The South Korean unit accounted for an 80pc loss in the March quarter in 2020 when Mahindra decided to sell its stake in the stressed asset.SsangYong, a loss-making entity was acquired in 2010, but Mahindra failed to turn it around despite several attempts. The COVID-19 pandemic exacerbated the situation. SsangYong posted losses in all the quarters since March this year.