Ssangyong Motor, a Mahindra Group company, said it had received the full payment of South 80 billion KRW (Korean Won) for new preferential shares allotted to its majority stakeholder Mahindra & Mahindra Group, reports said.
Ssangyong Motor decided to make a third-party allotment (Preferential Offer) to Mahindra on February 14 to secure investment funds for new products.
The most recent increase in the paid-in capital results from around 14.5 million new shares (capital increase ratio of 11.9 percent). All of the new shares will be locked up for one year, and the expected listing date is June 7. After this, Mahindra's shareholding ratio in Ssangyong Motor will increase to 72.85 percent from the 69.63 percent.
Apart from the KRW 80 billion paid-in capital, Mahindra has agreed to roll over corporate bonds worth KRW 95.4 billion won that was scheduled to mature in 2014 by another year. This is an additional source of funds for Ssangyong Motor.
Following the paid-in capital increase, Ssangyong's new product development, such as the small CUV, which will be launched in 2015, will gain momentum and the company's debt ratio will decline.
In 2011, Mahindra invested KRW 522.5 billion to acquire 70 percent of Ssangyong Motor Company, and since the acquisition the Ssangyong Motor Board has approved a total investment of around KRW 500 billion until now, which includes a KRW 295.8 billion investment for small-sized new engine development and CUV development projects.
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