Funding for New Car Development
SsangYong Motor has decided to increase capital by 50 billion won (US$44.5 million) by issuing new shares to its majority shareholder, Mahindra & Mahindra Ltd. of India.
The automaker will issue 11.89 million new shares, which represent 8.6 percent of the total number of shares issued before the capital increase. The new shares will be issued for 4,205 won per share and will be listed on Feb. 12, 2019.
The company said the capital increase is the second of its kind following the 80 billion won increase in 2013. Mahindra & Mahindra participated in the two capital increases, demonstrating its strong commitment to normalize SsangYong Motor’s operations through direct investment.
Over the past seven years since Mahindra’s acquisition in 2011, SsangYong has invested about 1.4 trillion won in developing five new models, and the Tivoli and Rexton brands are currently leading the market in their segments.
SsangYong Motor plans to develop new models as well as key future technologies such as electric vehicles and self-driving cars in order to actively respond to changes in global market environment and comply with the government's policy to promote eco-friendly future vehicles, the company said in a statement.
To achieve this, SsangYong Motor plans to make efforts not only to increase its capital but also to secure profitability by expanding sales.
"It is very encouraging that SsangYong Motor has successfully introduced its new cars to the market despite difficult management conditions," said Pawan Goenka, chairman of SsangYong Motor's board. “The latest capital increase shows Mahindra’s strong will to normalize the carmaker’s management as early as possible.”
"As the decision makes it possible to secure funding for new cars, we will accelerate the development of new cars," said Choi Jong-sik, CEO of SsangYong Motor. “We will solidify SsangYong’s position as a global SUV powerhouse by developing competitive new cars, including eco-friendly electric vehicles.”
Meanwhile, Mahindra acquired a 70 percent stake in SsangYong by investing 522.5 billion won (US$465 million) in March 2011. Its stake increased to 74.65 percent by subscribing to additional shares twice.