M&M’s Korean subsidiary fails to clear dues

Mahindra and Mahindra Ltd’s (M&M) ailing South Korean unit SsangYong Motor Company (SYMC) has failed to repay a loan of about 60 billion Korean won ( ₹408 crore), which was due on 14 December. Giving a breakup of the loans, the Mumbai-based automaker said in a filing on Tuesday that about ₹136 crore is owed to JPMorgan Chase & Co., ₹204 crore to Bank of America and ₹68 crore to BNP Paribas.

M&M said the missed repayment is part of outstanding loans totalling about ₹680 crore covered under commitments made by the parent company to the bankers of SYMC. It comprises nearly ₹408 crore from JPMorgan Chase, ₹204 crore from Bank of America and ₹68 crore from BNP Paribas with M&M as the guarantor.

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While M&M is expected to step in and clear the pending loans, it said its final liability towards SYMC would be limited to the extent of the unrecovered loan amount, which would be at ₹272 crore after repaying ₹408 crore.

“Whilst the company (M&M) has made a commitment to cover the above-mentioned loans to the banks, its final liability will be limited to the extent of amount not recovered from SYMC,” M&M said.

“On payment of the dues by the company (M&M) to the banks, the company will be subrogated to all the rights of the banks against SYMC and it will step into the shoes of the banks as creditor, and will be entitled to all rights which the banks had against SYMC, with respect to these loans,” it said.While M&M is expected to step in and clear the pending loans, it said its final liability towards SYMC would be limited to the extent of the unrecovered loan amount, which would be at ₹272 crore after repaying ₹408 crore.

“Whilst the company (M&M) has made a commitment to cover the above-mentioned loans to the banks, its final liability will be limited to the extent of amount not recovered from SYMC,” M&M said.

“On payment of the dues by the company (M&M) to the banks, the company will be subrogated to all the rights of the banks against SYMC and it will step into the shoes of the banks as creditor, and will be entitled to all rights which the banks had against SYMC, with respect to these loans,” it said.