Mahindra & Mahindra informed exchanges that the deal to sell SsangYong Motor Co (SYMC) to South Korean electric bus maker Edison Motors Co was terminated.
Mahindra & Mahindra’s (M&M) efforts to divest its loss-making and debt-laden subsidiaries have been met with a setback. The company informed exchanges on Thursday that the deal to sell SsangYong Motor Co (SYMC) to South Korean electric bus maker Edison Motors Co was terminated.
“Based on our enquiry, the receiver of SYMC had informed us today that the agreement between a consortium led by Edison Motors Co and SYMC to acquire the debt-ridden SYMC through a primary equity investment in SYMC has been terminated by Ssangyong, after consultation with the Seoul Bankruptcy Court, due to Edison’s inability to deposit the bid amount as per the terms of the investment agreement,” M&M said in a stock exchange filing. M&M said that Edison Consortium has appealed against the termination of the agreement.
M&M had ceased consolidating SYMC and its subsidiaries in the consolidated financial results from December 28, 2020, and had classified it as discontinued operations. The company had further said that if the investment of Edison-led consortium resulted in its stake in SYMC falling below 50%, SYMC would cease to be its subsidiary. M&M holds 74.65% in SYMC.
In September 2020, M&M’s shareholders had approved transfer or dilution of stake in SYMC and/or cessation of control in the company, including any restructuring plan through a court process undertaken voluntarily by SYMC.
On December 21, 2020, the company informed that SYMC had filed an application for commencement of rehabilitation procedure with the Seoul Bankruptcy Court under the Debtor Rehabilitation and Bankruptcy Act of South Korea. SYMC had also applied for a fourth designed process of Autonomous Restructuring Support (ARS) programme. Also, the court had appointed a receiver to manage the affairs of SYMC.
In January earlier this year, M&M informed the bourses that Edison has agreed to acquire SYMC for 304.858 billion won or nearly $254.65 million (Rs 1,882 crore) through a primary equity investment in SYMC. Edison-led consortium had also asked for a stake of 95% in SYMC against their investment and SYMC had agreed to make efforts to meet the said request.