US car distribution company HAAH Automotive Holdings is preparing to submit an offer to invest in SsangYong Motor, according to reports.
Reports suggest that HAAH executives have visited SsangYong's Pyeontaek plant in South Korea as part of the due diligence process that usually precedes a formal offer.
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SsangYong Motor's major stakeholder, Mahindra Group, has announced it will lower its stake from the current 75 percent to less than 50 percent, and that it is willing to give up its top shareholder position if it finds a new investor.
Reports also suggest that if Mahindra's stake goes below 50%, that could mean SsangYong goes into bankruptcy as it has taken loans conditional on Mahindra remaining in control.
The Korea Herald noted that some analysts believe HAAH Automotive does not have the funds to acquire sufficient stock to become the major shareholder, but could be supported by China-based Chery Automobile.
HAAH could be eyeing opportunities to sell SsangYong SUVs in the US.
Ssangyong reported its 13th consecutive quarter of financial losses in the first quarter of 2020, prompting Mahindra & Mahindra to inject KRW40bn (US$33m) into the company to help it stay afloat through the global pandemic.
But this was far short of the KRW230bn (US$187m) in fresh capital Mahindra had previously said was needed to return Ssangyong to profitability over a period of three years.
A Mahindra spokesperson confirmed "it is hard for us to find a new investor in SsangYong if we keep our majority stake. So Mahindra has agreed to lower its stake to below 50% to encourage more investors".
