Indian Central Bank Approves Mahindra Potato... 'Ssangyong Motor P-Plan' Gets a Breather

[Asia Economy Reporter Lee Gwan-joo] Ssangyong Motor's P-Plan has overcome a major hurdle with approval from the Reserve Bank of India (RBI).

According to industry sources on the 10th, Ssangyong Motor reportedly received an official letter from its major shareholder, India's Mahindra, stating that "the RBI has approved Mahindra's reduction of its stake in Ssangyong Motor."

In particular, the letter is said to include consent to the proposal to reduce Mahindra's stake from 75% to around 25% in order for Ssangyong Motor to enter the short-term court receivership P-Plan.

Mahindra had made RBI's approval a condition for agreeing to the reduction of shares and bonds to enable Ssangyong Motor's entry into the P-Plan. However, the Indian government had previously disallowed this, citing that the sale of overseas-held shares by domestic companies violated the prescribed limit (25%).

As a result, difficulties were expected in finding a new owner for Ssangyong Motor, but with RBI's approval of the reduction, the company has been able to breathe a sigh of relief regarding its entry into the P-Plan.

Based on this approval, Ssangyong Motor plans to sign an investment contract with HAAH Automotive and disclose the rehabilitation plan to all creditors to obtain consent for entering the P-Plan.

The P-Plan reportedly includes reducing the major shareholder Mahindra's stake through the reduction and having HAAH Automotive participate in a paid-in capital increase worth $250 million, thereby becoming the major shareholder (51%).

However, it remains uncertain whether HAAH Automotive will finalize the acquisition of Ssangyong Motor. While HAAH Automotive is strongly willing to become the new owner of Ssangyong Motor, it is said to be burdened by the public interest bonds amounting to approximately 370 billion won.

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