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Regulatory hurdles, valuation issues delays M&M’s exit from Ssangyong



Mumbai: Regulatory hurdles and valuation issues are hobbling a change of control in SsangYong Motors while Indian vehicle maker Mahindra & Mahindra is battling against time to revive the ailing Korean venture.

Informed sources said Mahindra wants to completely exit, while Haah wants to come in as a strategic investor. This has led to valuation issues with Haah Automotive and that has come in the way of concluding the stake sale as yet.

“We have not been able to agree to certain financial terms with Haah as yet,” said one person in the know.

The Mahindra Ssangyong combine may have to resort to a one-time write-off of foreign investment, which could run into regulatory hurdles, people in the know said.

“If the divestment of an overseas investment by an Indian company results in a write-off, Reserve Bank of India (RBI) permits such divestment only in limited circumstances,” says Sudip Mahapatra, partner at S&R Associates.

“Depending on the circumstances, RBI can grant exemption on a case-by-case basis. However, RBI might be concerned that such an exemption could set a precedent for other similar cases, Mahapatra added.

Mahindra currently owns 74.65% of cash trapped in Ssangyong. Samsung Securities and its global partner Rothschild have been brought on board to help find a suitor for SsangYong.

While negotiations are still going on, it is getting tougher with each passing day as bankruptcy is looming large on Ssangyong, said the person quoted above.

Currently, this is the only investor that Ssangyong is in discussions with and if this falls through, Ssangyong will have to go back to the drawing board and start to look for a new investor.

To sustain the operation, SsangYong Motor has managed to sell one of its service centres located in the Guro district in Seoul to an asset management company, PIA Investment Management.

Through this sale it raised close to $147 million for the Korean auto major that faces severe liquidity issues, according to reports in a section of Korean media.

Since July of 2020, SsangYong has witnessed month-on-month improvement in its sales, both in the domestic market as well as exports. In the first 10 months of 2020, the company had cumulative sales of about 85000 units with volumes down by about 24%.

The company was able to record sales increase for three consecutive quarters and delivered highest performance in Q3 thanks to diversified sales channel and non-face-to-face marketing and it is forecasting for a better Q4 both in terms of sales and profits on back of new models like Tivoli Air and All new Rexton.

SYMC was able to reduce its operating losses in Q3 with sales of 25,350 vehicles. The revenue for Q3 stood at 705.7 bn won, and operating loss at 93.2 bn won.

An email sent to Mahindra & Mahindra did not elicit any response.

Haah Automotive responded to an email query saying “We do not comment on rumours and speculation.”

With sales seeing some pick-up lately , Ssangyong is managing it’s working capital requirements in the interim. It’s in desperate need of funds to stay afloat after parent company Mahindra decided to let go of its control.

In September Haah Automotive made an “initial” offer of $258 million for a substantial stake in SsangYong Motors.

Mahindra paid Rs 2,100 crore ($463 million) for the purchase of the Korean car maker a decade ago and invested over $110 million.

Haah had also sought an extension of the loan repayments and their terms might not be acceptable to lenders.

Banks like JPMorgan, BNP Paribas, Bank of America, among others, have a 260 mn dollar (306 billion won) exposure.

Banking sources told ET that while the initial amount will be used to seek extension of SsangYong’s debt repayment, the lenders have made it clear that the incoming investor in the company will have to clear the dues upfront if Mahindra cedes control.

Haah Automotive Holdings, purchases various vehicle assemblies from Chery which, along with parts sourced in North America, are assembled in an American factory where the final vehicles are produced. These products are sold under the brand name VANTAS in North America. Informed sources say the aim is to close the deal as soon as possible so that vehicle exports to North America can start , allowing SsangYong Motor to make an inroad into the US market.

Mahindra’s board moved a special resolution at its AGM to reduce its shareholding in SsangYong to less than 50%, an indication of a new investor coming in rather than a complete sell out.

The board last April rejected a Rs 3300 crore turnaround plan for SsangYong, pushing the Korean car maker into deep financial distress.

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Tesla (TSLA) earnings Q4 2020




Employees work at the Tesla Gigafactory in Shanghai, east China, Nov. 20, 2020. U.S. electric car company Tesla in 2019 built its first Gigafactory outside the United States in the new Lingang area, with a designed annual production capacity of 500,000 units.

Ding Ting | Xinhua News Agency | Getty Images

Tesla is expected to report 2020 fourth quarter results on Wednesday after the bell, and to offer guidance for the first quarter and full year ahead.

Here’s what analysts are expecting, according to an average of estimates compiled by Refinitiv as of Wednesday:

  • Earnings: $1.03 per share expected
  • Revenue: $10.4 billion expected

And here’s what guidance Wall Street expects from Tesla for the full year ahead:

  • 2021 earnings guidance: $4.15 per share expected
  • 2021 revenue guidance: $46.09 billion expected

Tesla previously said it had delivered 499,550 vehicles in 2020, falling barely shy of its guidance for half a million vehicle deliveries in 2020. (Deliveries are the closest approximation of sales numbers disclosed by Tesla.) It produced 509,737 vehicles during the year.

Both deliveries and production numbers set a new record for Elon Musk’s maturing electric car company, seen as a triumph in a year when auto sales and factory operations were dampened by a global pandemic.

Starting around the end of 2019, Tesla has said that it expects to report positive cash flow and net income moving forward, with possible exceptions around the launch and ramp in production of new products or facilities. Last quarter was its fifth consecutive quarter of profitability — which led to the addition of the company to the S&P 500.

Tesla is currently building new factories in Austin, Texas, and Brandenburg, Germany, after quickly constructing and reaching a high volume of production at its last new plant in Shanghai.

Vehicle sales in China largely enabled Tesla to hit record deliveries in 2020. So did the introduction of a new crossover SUV, the Model Y, which Tesla began to produce in serious volumes in the first quarter last year out of its Fremont, California car plant.

By the period ending in September 2020, Tesla was making more Model Ys than Model 3s for US drivers, according to NHTSA records on light vehicle production. The company has not historically broken out sales numbers by region, or precise model. Instead it combines sales of Model Y and 3, and Model S and X.

Since Tesla’s third quarter earnings call in October 2020, the price of the company’s stock has more than doubled, giving it a market capitalization of more than $835 billion and making it the fifth-most valuable company in the U.S.

This is breaking news. Please check back for updates.

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GM returning with two ads focused on electric vehicles




One of General Motors’ two Super Bowl ads this year will feature the Cadillac Lyriq. In this provided screenshot of the Cadillac ad, the Lyriq appears to be in the fictional neighborhood of 1990’s “Edward Scissorhands” movie.


DETROIT – General Motors will air two commercials during this year’s Super Bowl advertising its all-electric vehicles, the company confirmed Wednesday to CNBC.

One of the 60-second ads will feature the company’s new focus on electric vehicles — GM’s first corporate spot in more than a decade — while the other will feature the automaker’s luxury Cadillac brand and its upcoming Lyriq crossover EV.

GM is launching the new ad campaign after recently redesigning its corporate logo to better represent the its pivot to EVs, including 30 new models globally under a $27 billion investment in electric and autonomous vehicles through 2025. The redesigned logo accompanies a new “everyone in” tagline.

“General Motors is creating a movement by making EVs fun, desirable and accessible for people from every walk of life,” GM Chief Marketing Officer Deborah Wahl said in a statement. “We’re excited to demonstrate the tremendous energy and enthusiasm behind our EV commitment by showing up big at this year’s Super Bowl with both GM and Cadillac.”

A GM spokesman declined to discuss further details of the ads, which will likely to be released prior to their national broadcasts during next Sunday’s Super Bowl LV between the Tampa Bay Buccaneers and Kansas City Chiefs.

Cadillac Chief Marketing Officer Melissa Grady separately said the brand’s Super Bowl ad “will surprise and delight audiences by transporting an iconic piece of pop-culture history into the future.” She said it will feature the Lyriq as well as the company’s Super Cruise hands-free driver assist system. It will be Cadillac’s first time advertising during the Super Bowl since 2012.

This will be GM’s second-consecutive year of advertising during the Super Bowl. A year ago, the company previewed its all-electric GMC Hummer EV pickup. The 30-second ad featured NBA star LeBron James and teased the new vehicle, which is expected to go on sale this fall.

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Fiat Chrysler to pay $30 million to settle federal corruption probe




UAW President Rory Gamble (left) and U.S. Attorney Matthew Schneider announce a settlement agreement to end a years-long corruption investigation into the union on Dec. 14, 2020 in Detroit.

Michael Wayland / CNBC

Stellantis, formerly Fiat Chrysler, has agreed to pay $30 million as part of a plea deal to settle a criminal investigation into collusion and bribery of union officials by former executives of the company’s North American operations.

The deal, which was announced Wednesday by federal prosecutors in Detroit, ends a multiyear federal probe into Fiat Chrysler and the United Auto Workers union. Prosecutors announced a separate plea deal last month with the UAW.

It’s unclear at this time when Stellantis will pay the fine as the agreement remains subject to U.S. federal court approval.

Under terms of the deal, the company agreed to plead guilty to a single count of conspiracy to violate the Labor Management Relations Act.

The agreement also requires the company to hire an independent compliance monitor for three years. That person will oversee the dissolution of a training facility at the center of the probe, among other things, according to the company

The investigation has led to convictions of 15 people, including two past UAW presidents, three Fiat Chrysler executives and a former General Motors board member who was a union leader. Prison sentences for those involved have ranged from 60 days to 6½ years. A handful of people are still awaiting sentencing.

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