KDB Insists Mahindra & Mahindra Remain as a Shareholder
Mahindra & Mahindra, HAAH Automotive Holdings and the Korea Development Bank (KDB) are failing to reach an agreement on whether Mahindra & Mahindra has to remain in SsangYong Motor as a shareholder. HAAH is a potential SsangYong acquirer and the KDB is the main creditor bank to SsangYong.
The four sides had a meeting on Jan. 12 and reconfirmed their different views. The current issue is whether Mahindra & Mahindra has to maintain its position as a shareholder after the management rights are transferred to HAAH. At present, Mahindra & Mahindra owns 74.7 percent of SsangYong and the plan of the KDB and HAAH is a share issuance for HAAH’s 51 percent ownership. Then, Mahindra & Mahindra’s stake will fall to 37.9 percent.
The KDB and HAAH are calling for Mahindra & Mahindra to remain in SsangYong as the largest shareholder until its business returns to normal. This is because SsangYong has to repay overdue loans from foreign banks and Mahindra & Mahindra’s stake exceeding 51 percent is stipulated as a requirement in the loans. In other words, the KDB and HAAH are calling for Mahindra & Mahindra to extend the borrowings on its own responsibility.
Mahindra & Mahindra wishes to completely leave SsangYong after selling its shares. The largest shareholder is adamant and any agreement is unlikely in the near future. SsangYong is supposed to find a new investor and submit its restructuring plan to creditors by Feb. 28.