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.
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.