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Automobiles

HAAH Automotive proposes $258 mn investment in Ssangyong Motor

Sep 21, 2020 (Gmt+09:00)

HAAH Automotive Holdings Inc., a US automobile distributor, has offered to invest 300 billion won ($258 million) in Ssangyong Motor Co. as part of its bid to acquire a significant stake in the South Korean automaker, according to sources in the investment banking industry.

The sources said on Sept. 20 that HAAH Automotive last week submitted a proposal to India’s Mahindra and Mahindra Ltd. that it is willing to invest the amount in cash-strapped Ssangyong if it means its stake is large enough to control the Korean maker of sport utility vehicles. Mahindra, the largest shareholder of Ssangyong with a 75% stake, is considering the offer, they said.

In the proposal, HAAH Automotive also presented some conditions for its investment, such as a deferral of Ssangyong’s debt repayment to its creditors until the automaker is fully normalized, according to the sources.

ssangyong-motor

In early August, Mahindra expressed its intention to give up management rights over the carmaker, stressing that it had no plan to inject new capital into the loss-making company.

Mahindra’s managing director Pawan Goenka said during a conference call on second-quarter results that it was working on a plan to cut its ownership in Ssangyong to less than 50% on condition that the Korean SUV maker finds a new investor. Ssangyong has selected Rothschild and Samsung Securities as its sale managers.

Falling exports in the absence of new models have dealt a heavy blow to the already troubled Korean automaker. Its operating loss more than doubled to 117.1 billion won in the April-June quarter, compared to a shortfall of 49 billion won a year earlier.

Industry watchers said HAAH Automotive may not have enough money to become a major shareholder of SsangYong with only 20 billion won in annual sales, as SsangYong needs 500 billion won to normalize its operations.


“HAAH Automotive’s proposal is not a binding offer. Also, it is known that there’s a difference between Mahindra and HAAH over the size of the stake up for sale,” said a source close to the matter.

Based in Irvine, HAAH Automotive is an auto startup established in 2014 by Duke Hale, a former vice president of Volvo, Mazda, Jaguar and Land Rover. HAAH is reportedly planning to distribute Chinese vehicles in the North American market.

By Jun Ho Cha

chacha@hankyung.com

Edited by In-Soo Nam

In-Soo Nam edited this article

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