Mahindra & Mahindra (M&M) is putting in KRW 80 billion ($73.7 million) afresh in Ssangyong Motor Co by subscribing to fresh issue of shares. The move will increase its holding in Ssangyong from 69.63 per cent to 72.85 per cent and the infusion would facilitate improvement of the financial structure of Ssangyong. The proceeds of the issue will be utilised for new product development such as small crossover utility vehicle (CUV) models.
M&M will subscribe to 14.5 million shares at an issue price of KRW 5,500 per share.
Mahindra, India’s biggest sports utility vehicle manufacturer, will subscribe to preferential shares issued by Ssangyong to facilitate new product development and strengthen the South Korean company’s financials.
The payment is expected to be made on May 22. Ssangyong, a public listed firm in South Korea, last traded at KRW 6,320 (up 3.6 per cent), which means the new issue is at a discount of around 13 per cent to the current price.
M&M invested a total of KRW 522.5 billion (over $460 million) in March 2011 (new paid-in capital increase of KRW 427.1 billion and KRW 95.4 billion in corporate bonds) to acquire around 70 per cent stake in Ssangyong. It had also approved an investment plan of KRW 295.8 billion in February 2012 for development of new engines and a small CUV project.
(Edited by Prem Udayabhanu)