A consortium led by South Korean Edison Motors will acquire a controlling stake in SsangYong Motor Company, ending Mahindra & Mahindra’s failed attempts to turn the struggling SUV maker into a profitable takeover.
A bankruptcy court has given the green light to the consortium, which agreed to inject 305 billion won ($ 254.65 million) into the heavily indebted SsangYong.
Edison Motors will be SYMC’s fifth owner since its inception over seven decades ago. Since its acquisition in 2010, SsangYong has been a struggling unit for M&M almost every year despite several attempts by the latter to turn it around.
SYMC has been in receivership since April last year. This was preceded by a one-year attempt by M&M to find a buyer for SYMC. Following a rigorous financial review by M&M management due to Covid-19, the company decided to stop investing in SYMC in mid-2020. The SYMC had requested an infusion of $ 406 million. M&M wrote down 1,210 crore on the SYMC investment during the last fiscal year.
Losses for 19 quarters
The cash-strapped Korean company has recorded losses for 19 consecutive quarters and is struggling to stay afloat. It even sold non-core assets to generate cash in 2020, after M&M refused to inject new funds.
Between January and September 2021, SYMC’s sales fell 21% to 84,496 units compared to the same period a year earlier. It recorded an operating loss of 238 billion won in the same period.
Electric vehicle manufacturer
Founded in 1998, Edison Motors is a manufacturer of 100% electric vehicles. It has so far built a multi-seat passenger bus and a mini-truck, both of which are battery-powered.