SEOUL, Aug. 20 (Korea Bizwire) — A U.S. automotive distribution company may submit a binding offer to acquire a stake in SsangYong Motor Co. next month as the carmaker’s Indian parent looks for an investor, media reports said Thursday.
HAAH Automotive Holdings, Inc., a California company that imports vehicles for the U.S. market, is preparing the binding bid to make an investment in SsangYong Motor, according to local news reports.
A binding offer refers to an offer made by a bidder to acquire a company after the due diligence phase of a sale process is complete.
The news sent SsangYong 6.9 percent higher to close at 3,350 won, far outperforming the broader KOSPI’s 3.7 percent decline.
SsangYong Motor didn’t comment on the reports.
Its parent Mahindra & Mahindra Ltd. is looking for a new investor in SsangYong, a SsangYong spokesman said over the phone.
“HAAH Automotive Holdings does not comment on rumor and speculation,” the U.S. company’s spokesman Chris Hosford said in an emailed statement.
Mahindra, which owns a 74.65 percent stake in SsangYong Motor, recently said it will give up its status as the biggest shareholder of SsangYong if it finds a new investor.
Mahindra has said it does not have a plan to inject fresh capital into SsangYong.
Mahindra said early this year it would inject 230 billion won into SsangYong for the following three years after obtaining approval from its board.
But its board voted against the investment plan last month as the spreading COVID-19 outbreak continues to affect vehicle sales in global markets.
Instead of the proposed 230 billion won (US$194 million), Mahindra said it would consider a “special one-time infusion” of up to 40 billion won over the next three months to help SsangYong continue operations.
The one-time cash injection falls far short of the 500 billion won Mahindra Managing Director Pawan Goenka had said is needed to turn SsangYong around by 2022.
Last week, KPMG Samjong Accounting Corp., the auditor of SsangYong, declined to give its opinion on the carmaker’s earnings results for the January-June period.
If Samjong gives no opinion on SsangYong’s annual financial statements for the year, the company can appeal the decision within a week and will be given one year to improve its financial health.
SsangYong could be delisted if its accountant again refuses to offer an opinion on the company’s annual performance for the following year after the one-year period.
The SUV company has continued to report net losses for the past 14 quarters through the second quarter of this year.
From January to July, it sold 56,846 vehicles, down 28 percent from 78,687 units in the year-ago period.
SsangYong’s lineup consists of the flagship G4 Rexton, as well as the Tivoli, Korando and Rexton Sports SUVs.
In 2011, Mahindra acquired a 70 percent stake in SsangYong Motor for 523 billion won.