Ssangyong acts to raise $73.8 million in new funds

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Ssangyong acts to raise $73.8 million in new funds

Ssangyong Motor said yesterday it will raise 80 billion won ($73.8 million) in investment funds through third-party allocation of new shares.

The board of the nation’s smallest automaker approved the issuance of more than 14.5 million new shares at 5,500 won per share. The issue of new stock is targeted for Ssangyong’s largest shareholder, Mahindra & Mahindra, it added.

Mahindra bought 70 percent of Ssangyong’s shares after injecting 522.5 billion won in March 2011. The capital increase with consideration was part of an agreement among Ssangyong management, its labor union and Mahindra in December.

Ssangyong said the money will be mainly used for operating expense and to develop a compact SUV, code name X100.

The board’s action will result in a capital increase from the current 613.4 billion won to 686.1 billion won. With the debt-to-equity ratio going down and liquidity increasing, the company’s financial strength is expected to improve significantly, Ssangyong said.

“This paid-in capital increase reflects Mahindra’s strong commitment to support Ssangyong Motor in its efforts to achieve an early turnaround,” said Pawan Goenka, president of Mahindra’s automotive and farm equipment division. “By expanding investment and creating tangible synergy in sales, product development and sourcing, we will continue to increase our global competitiveness.”

Ssangyong’s investment plan was in doubt after politicians tried to launch a parliamentary audit of the company’s massive layoffs in 2009. The company has been saying that the investigation could negatively affect the investment plans of Mahindra.

The automaker turned in an impressive performance last year, selling 120,717 vehicles worldwide for a 6.8 percent year-on-year increase.

For this year, Ssangyong has set a goal of selling 149,300 vehicles, about 20 percent more than 2012.


By Joo Kyung-don [kjoo@joongang.co.kr]

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