Mahindra "Ssangyong Motor Sale Imminent... Signing of Key Term Sheet Possible as Early as Next Week"

[Asia Economy Reporter Kiho Sung] There is a prospect that the sale negotiations of Ssangyong Motor, which is looking for a new owner, could be finalized as early as next month. This is because the Mahindra Group, the major shareholder of Ssangyong Motor, announced that it will sign a term sheet outlining the main conditions for transferring management rights next week. If Ssangyong Motor finds a new owner, it is expected to escape the crisis of corporate rehabilitation procedures (court receivership).

According to Indian foreign media on the 2nd, Pawan Goenka, President of Mahindra, said at a press conference on the 1st, "Negotiations related to the sale of Ssangyong Motor have almost been completed," and "The goal is to finalize it by the 28th of next month." The term sheet mentioned by President Goenka is a document containing detailed contract conditions before the main contract.

However, President Goenka did not specifically disclose the new investor.

Mahindra is the major shareholder of Ssangyong Motor, holding 74.7% of the shares. Since the announcement of the sale of Ssangyong Motor, it has been negotiating with the U.S. automobile distributor HAAH. The key issue is whether the Indian government will ease regulations. HAAH is currently demanding more than 50% of Ssangyong Motor's shares and management rights from Mahindra, but the Indian government's legal regulations, which set a limit (25%) on the sale of overseas shares held by domestic companies, are known to be the biggest obstacle in the negotiations. If this is resolved, the search for a new owner of Ssangyong Motor is likely to accelerate within February.

President Goenka added, "If the deal is successful, most of the ownership will be with the new investor," and "Mahindra plans to reduce its shareholding to below about 30%, and will also proceed with a capital reduction of 25% allowed under the Reserve Bank of India (RBI) regulations."

Anish Shah, Mahindra CFO, expressed hope that the new investor will acquire and operate Ssangyong Motor, stating, "If the sale does not take place, Ssangyong Motor will enter the court receivership process."

This content was produced with the assistance of AI translation services.