According to a regulatory filing, Mahindra & Mahindra has announced that its South Korean-subsidiary, SsangYong Motor (SYMC), has missed loan payment of 60 billion KRW (Rs 408 crore) to JP Morgan Chase Bank due on December 14.
The M&M announcement details that SsangYong Motor Company has loans aggregating to 100 billion Korean Won (approximately Rs 680 crores). The filing stated that there are outstanding loans of 60 billion KRW (around Rs 408 crore) from JP Morgan Chase Bank, 10 billion KRW (around Rs 68 crore) from BNP Paribas and 30 billion KRW (around Rs 204 crore) from Bank of America.
SsangYong Motor Company is already in distress as a result of the global economic slowdown and decline in sales. Though earlier it was expected that the company will breakeven last year, it now seems to take even longer.
Mahindra has stated that, "while the company (M&M) has made a commitment to cover the above-mentioned loans to the banks, its final liability will be limited to the extent of amount not recovered from SsangYong Motor. On payment of the dues by the company to the banks, the company will be subrogated to all the rights of the banks against SYMC and the company will step into the shoes of the banks as creditor, and will be entitled to all rights which the banks had against SYMC, with respect to these loans."
It maybe recollected that till early February, Mahindra was looking to infuse funds in the Korean company, and had earmarked around Rs 2,800 crore to turnaround the company by 2022. But with the Covid-19 pandemic disrupting plans, and with mounting losses from its international businesses Mahindra in June announced that it will not make any further investment in SsangYong and Genze brand. Interestingly, Mahindra has been open that it would be willing to sell its nearly 75 percent stake in SsangYong.