Mahindra has announced that its South Korean unit, Ssangyong Motor Co., has failed to repay a loan worth 60 billion to 3 Banks
About Company
Ssangyong was bought from near-insolvency in 2010.
However, Mahindra has struggled to transform it into a profitable venture. Instead, Ssangyong has only emerged as a liability in the past decade.
Since June this year, Mahindra has been looking for a buyer who will be ready to purchase all or most of its 75% stake in the South Korean sport utility vehicle (SUV) manufacturer.
Banks whose defaulted
The banks whose loan repayment was defaulted by Ssangyong includes: JP Morgan, BNP Paribas and Bank of America
Default bifurcation
Mahindra states that out of the total amount, which was due on December 14, 2020, SsangYong was supposed to pay about 20 billion Won (Rs. 136 crores) to JP Morgan, 10 billion Won (Rs. 68 crore) to BNP Paribas, and 30 billion Won (Rs. 204 crore) to Bank of America.
Additionally, interests from the three banks will add up to about 60 million won (Rs. 39 crore).
Outstanding Liability
SsangYong’s total outstanding loans aggregate up to 100 billion Won, which is approximately Rs. 680 crore. However, while Mahindra has stated that it has made a commitment to cover the above-mentioned loans given by the Banks, its final liability will be limited to the extent not recovered from SsangYong.
Though Mahindra has made a commitment to cover them, its final liability will be limited to the amount not recovered from the South Korean auto giant.
Stock Market Impact
Both Mahindra and Ssangyong witnessed a downward spiral on the stock market.
Shares of the Indian automaker fell as much as 1.5% to their lowest since November 23, while those of Ssangyong plummeted up to 7.72%.
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