India's Mahindra & Mahindra Ltd is in talks with a potential investor to sell a controlling stake in its bankrupt South Korea SUV manufacturer SsangYong Motor, according to media reports.
SsangYongMotor filed for court receivership on 21st December after it failed to meet its considerable debt repayment obligations. The company's global sales fell by 19% to 96,763 units in the first eleven months of last year, mainly due to weak overseas sales.
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Mahindra &Mahrindra has stated for some time that it does not intend to invest further in the South Korean automaker and has been looking for a new strategic investor for over a year.
The Indian carmaker's managing director, Pawan Goenka, told reporters on Friday that it expects to sign a non-binding agreement with a potential investor this week to sell the majority of its shares in SsangYong Motor.
The deal would reduce Mahindra's stake in its South Korean subsidiary to 30% or less if it is finalised as planned by the end of February, from almost 75% at present. State-run Korea Development Bank is currently the company's second-largest shareholder, followed by China's SAIC motor.
In late December SsangYong Motor was forced to halt production after key suppliers including Hyundai Mobis, S&T Dynamics and LG Hausys Ltd refused to supply components due to the company's financial struggles.
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