Mumbai, Feb. 14: Mahindra and Mahindra plans to raise its stake in its Korean subsidiary SsangYong Motor Co (SMC) by investing 80 billion Korean won (about $73.7 million).
The board of SsangYong has approved the issue of 14.54 million shares through third party allotment to raise its paid-in capital by 11.9 per cent.
M&M, which has a 70 per cent stake in SsangYong, will subscribe to the new shares.
The issue price for the shares will be 5,500 Korean won per share with payment expected on May 22. The new shares will list on June 7.
“M&M has decided to subscribe to the aforesaid offer and invest an amount aggregating around 80 billion Korean won (equivalent to around $73.73 million at the current rate of exchange),” the company said in a filing to the BSE.
The preferential offer will result in an increase in the paid-up capital of SMC by 11.9 per cent and increase in M&M’s stake in SMC to 72.85 per cent from 69.63 per cent.
The issue will facilitate an improvement in SMC’s financial structure. Proceeds of the issue will be used by SMC to develop new products and strengthen its competitiveness, the company said.
“This paid-in capital increase reflects Mahindra’s strong commitment to support SsangYong in its efforts to achieve an early turnaround,” said M&M president (automotive and farm equipment) Pawan Goenka, who is also the chairman of the SMC board.