Old brand auto company brilliance falls into debt crisis, BMWs response to increase holdings is not affected

category:Finance
 Old brand auto company brilliance falls into debt crisis, BMWs response to increase holdings is not affected


Reorganization proceedings may start

On the evening of November 16, brilliance automobile announced that at present, brilliance automobile has constituted a debt, the total amount of default is 6.5 billion yuan, and the amount of overdue interest is 144 million yuan. Due to the shortage of enterprise funds, the approval of extension credit is not completed, resulting in the inability to repay. The debt default of brilliance automobile has a significant impact on the production and operation of the headquarters of brilliance automobile, leading to the deterioration of financial situation and greatly affecting the solvency.

Brilliance automobile said in the announcement that since this year, due to the increasing debt pressure, there have been a number of litigation cases with brilliance automobile as the defendant and involving a large amount of money, and the relevant courts have taken preservation or enforcement measures to seal up and freeze the relevant assets or equity, which has a great impact on the companys production and operation. The company is actively negotiating with relevant creditors, increasing fund-raising efforts, speeding up the work related to clearing debts and activating assets, and striving to properly resolve debts.

According to the bond semiannual report of brilliance automobile in 2020, the groups total liabilities are 132.844 billion yuan. After deducting goodwill and intangible assets, the asset liability ratio is 71.4%, and the balance of cash and cash equivalents at the end of the period is 32.677 billion yuan. In addition, Brilliance China semi annual report shows that in the first half of 2020, the revenue of Brilliance China is 1.45 billion yuan, and the net profit is 4.025 billion yuan. However, after excluding the net profit contributed by BMW Brilliance of 4.383 billion yuan, it means that brilliance china lost more than 340 million yuan in the first half of the year. Brilliance automobile was applied for bankruptcy reorganization, the fuse is the debt default, this is a series of chain reactions. As a provincial and municipal key enterprise, Liaoning Province will not ignore, but will not assume all debts for it. Therefore, brilliance Automobile Group will not go into bankruptcy liquidation, and the next step is likely to be reorganized. Cao he, President of quanlian auto Investment Management Co., Ltd.

China Huachen Group Co., Ltd. is a state-owned subsidiary of China Huachen Group Co., Ltd. and Shanghai Huachen Group Co., Ltd., which is a subsidiary of China Huachen Group Co., Ltd. and Shanghai Huachen Group Co., Ltd., which is a key holding company of China. On November 16, Shenhua holdings and Jinbei Automobile Co., Ltd. both opened low due to the application for restructuring of Huachen group, an indirect controlling shareholder. Jinbei Automobile fell 4.1% and Shenhua holdings fell 0.53%. Shenhua holdings and Jinbei Automobile successively issued announcements on the evening of November 15. The indirect controlling shareholder of the company, brilliance group, received a notice served by Shenyang Intermediate Court on November 13. The creditor of brilliance group, Gezhi technology, applied for restructuring of brilliance group. If it enters the reorganization procedure, it may have certain influence on the companys ownership structure and other aspects.

Brilliances independence is not sustainable

The main reason for brilliance autos default is the weak profit of its own brand, which relies heavily on BMW Brilliance.

From 2015 to 2019, brilliance autos independent plate lost 540 million yuan, 600 million yuan, 860 million yuan, 420 million yuan and 1.064 billion yuan respectively, with a total loss of nearly 3.5 billion yuan. Brilliance Autos independent brand vehicle business includes Brilliance China, Huasong, brilliance golden cup and other products. According to the data released by the Travel Association, Brilliance China sold 3186 vehicles in the first half of this year, with an average monthly sales of only about 500 vehicles. Huasong series products have long disappeared, while the sales volume of Jinbei series products in 2019 is less than 20000.

In contrast, the joint venture brand BMW Brilliance has contributed 3.923 billion yuan, 3.993 billion yuan, 5.233 billion yuan, 6.245 billion yuan and 7.626 billion yuan to brilliance automobile group in the past five years, with an accumulated profit of 26.9 billion yuan. As brilliances voice in BMW Brilliance is getting lower and lower, in 2018, brilliance signed an agreement with BMW, and BMW will acquire 25% of the equity of BMW Brilliance from brilliance automobile before 2022. At that time, BMW and brilliance automobile respectively hold 75% and 25% shares of brilliance BMW, and will no longer be included in the merger scope of brilliance automobile.

As a joint venture with BMW, BMW Brilliances future operation, and whether BMWs increase in its stake in BMW Brilliance joint venture has changed, BMW responded immediately. BMW said that its increase in its stake in BMW Brilliance, a joint venture in China, would not be affected by the debt problem of its parent company, Brilliance Automotive Group.

BMW said in an email that for BMW, there is no indication that the validity of previous contracts will be limited by the current situation of brilliances parent company, and BMW Brilliances operations will not be affected by brilliances debt.

It is understood that BMW said in 2018 that it would acquire 25% of the shares of BMW Brilliance in 2022 at a price of 3.6 billion euro (about 4.2 billion US dollars), increasing the shareholding ratio from the existing 50% to 75%, so as to obtain the control of BMW Brilliance. At the same time, BMW Group and brilliance automobile group jointly announced that both shareholders would extend the joint venture agreement of BMW Brilliance until 2040. In addition, BMW Group will invest 3 billion euro in BMW Brilliance, which will be used for the reconstruction and expansion project of Shenyang production base in the next few years. It can be seen that BMWs emphasis on and investment in the Chinese market will not change due to the restructuring of brilliance. However, with the change of BMWs equity, the survival pressure of Brilliance will undoubtedly be further intensified. (editor in charge: Yu Jianping, editor in chief: Zhao Yun) source: China Times editor in charge: Chen Hequn_ NB12679

It is understood that BMW said in 2018 that it would acquire 25% of the shares of BMW Brilliance in 2022 at a price of 3.6 billion euro (about 4.2 billion US dollars), increasing the shareholding ratio from the existing 50% to 75%, so as to obtain the control of BMW Brilliance. At the same time, BMW Group and brilliance automobile group jointly announced that both shareholders would extend the joint venture agreement of BMW Brilliance until 2040. In addition, BMW Group will invest 3 billion euro in BMW Brilliance, which will be used for the reconstruction and expansion project of Shenyang production base in the next few years. It can be seen that BMWs emphasis on and investment in the Chinese market will not change due to the restructuring of brilliance. However, with the change of BMWs equity, the survival pressure of Brilliance will undoubtedly be further intensified. (editor in charge: Yu Jianping, editor in chief: Zhao Yun)