AutoBeta(AutoBeta.net)05/18 Report--

On the evening of May 17, brilliance China Hong Kong shares issued an announcement that the board of directors announced that Huachen Renault, Jinbei Automobile Control and managers had entered into a restructuring investment agreement on the relevant formal proposal.

The content of the announcement shows that after the formal reorganization plan was approved by the Shenyang Intermediate people's Court, the formal reorganization plan proposes that the fully paid-up share capital of brilliance Renault held by Jinbei Automobile Control and Renault respectively be wiped out in full; after zero, all existing claims of Huachen Renault of about RMB 1.668 billion and RMB 711 million of Renault claims will be converted into brilliance Renault shareholders' equity. In addition, it is proposed that brilliance Renault debts other than Jinbei Auto Control restructuring claims and Renault claims should be injected into Huachen Renault with cash within 12 months from the date on which the reorganization plan was approved by the Shenyang Intermediate people's Court, with a maximum contribution of 1.36 billion yuan.

The announcement pointed out that if the formal reorganization plan is approved by the Shenyang Intermediate people's Court, Huachen Renault will own about 36.37%, 44.61% and 19.02% of the actual interests respectively by Jinbei Automobile Control, Xing far East and Renault after the reorganization is completed. After the restructuring, Huachen Renault will become a non-wholly owned subsidiary of brilliance China Automobile Holdings Limited, and Huachen Renault's financial results will be included in the consolidated financial statements of brilliance China Automotive Holdings Limited.

In December 2021, brilliance Renault Gold Cup Co., Ltd. formally filed for bankruptcy, and in January 2022, brilliance Renault bankruptcy reorganization was formally accepted by the Shenyang Intermediate people's Court. Since then, rumors about brilliance Renault restructuring have flowed out in the industry from time to time. On the 24th of last month, there was the news that the Shenyang municipal government had acquired a 30% stake in brilliance, and then the news was quickly refuted by officials. Brilliance China issued an announcement that recently there have been a number of media reports about the Shenyang municipal government's possible acquisition of shares in the company from brilliance Automobile Group holding Co., Ltd. The Board would like to clarify that to the best of the Company's knowledge, knowledge and belief after making all reasonable enquiries, the Company is not aware of the matters reported in the media and the source of the information contained therein.

According to the query of "Automotive Industry concern", brilliance Renault Gold Cup, formerly known as Shenyang brilliance Golden Cup Automobile Co., Ltd. (hereinafter referred to as "Golden Cup Automobile"), was first born in 1989 and is one of the earliest brands engaged in light commercial vehicles in China. Before 2010, rely on sea lion, Grace and other best-selling models to quickly seize a certain share of the market. In 2010, the Jinbei bus market reached 1 million vehicles, making it the first light passenger brand in China, with the highest market share of 75%, and the largest sales volume in China's commercial vehicle market for 19 consecutive years.

However, since then, it has been impacted by Jiangling Motor and other commercial vehicle companies, and Jinbei Automobile itself has also failed to follow the development of the market, which has led to a sharp drop in sales of Jinbei Automobile. According to the data, Golden Cup car sales in 2015 were 96000, which plummeted to 23000 in 2016, and year-on-year sales slump has led to an increase in Jinbei car debt. According to the financial report, the net loss of Jinbei Automobile in 2016 was 708 million yuan, with a total debt of 10.7 billion yuan and a net debt of 3.606 billion yuan.

In order to turn the situation around, brilliance China, as a shareholder, introduced Renault Group, hoping that the Renault brand can revive the Golden Cup. However, the emergence of Renault did not make Jinbei car "reborn". For Golden Cup, although Renault brought money, it did not invest too much in R & D technology.

In December 2017, brilliance China announced that it would transfer 49% of Jinbei Automobile's equity and equal proportion of debt to Renault Motor at a price of 1 yuan, and the two sides jointly established Huachen Renault Golden Cup Automobile Co., Ltd. After the establishment of brilliance Renault, the two sides reached an agreement to produce and sell light commercial vehicles under the Golden Cup, Renault and Huasong brands, and to produce three major categories of vehicles in the form of localization-- MPV, medium-sized vans and vans, large vans and vans, with annual sales of 150000 vehicles by 2022.

But the brilliance Renault Gold Cup didn't go as planned. The first model was not a commercial vehicle, but a medium-sized SUV called Guanjing, but failed to reverse the decline in sales. Data show that from 2018 to 2020, brilliance Renault Cup sales were 43000, 40000 and 23000 respectively, down 30 per cent, 6.5 per cent and 42.8 per cent respectively from a year earlier.

In March 2020, brilliance disclosed that its total liabilities (including brilliance BMW) were as high as 122.675 billion yuan. In July of the same year, brilliance Renault Gold Cup was exposed with negative news such as layoffs and internal unrest. In November, brilliance Group officially went bankrupt and restructured, and in the process of bankruptcy reorganization, including brilliance independent passenger cars, spare parts, brilliance Renault Gold Cup and so on, the business of internal molecular companies had stagnated, and the corresponding brand terminal dealers had no cars to sell. Many dealers switched to other brands. For a while, in addition to brilliance BMW, the business of Golden Cup, Huasong, Chinese car and other businesses within brilliance Group collapsed collectively, not long after. Brilliance Renault Gold Cup also declared bankruptcy. The industry believes that poor management of brilliance Group and slow product renewal are one of the main reasons why brilliance Renault is going bankrupt.

On March 29, brilliance China announced its annual financial results for 2022. Data show that brilliance China's comprehensive income (mainly from Ningbo Yumin, Mianyang Ruian and brilliance East Asia Auto Finance) was 1.131 billion yuan in 2022, down 47.2% from the same period last year, while net profit fell 40.25% to 7.147 billion yuan. Brilliance China said that the decrease in comprehensive income was mainly due to the exclusion of Light bus and MPVs sales of Huachen Renault. In addition, after brilliance BMW completed the equity change, brilliance BMW merged with BMW Group, brilliance BMW as a joint venture to contribute net profit to brilliance China decreased significantly from 14.515 billion yuan in 2021 to 2.38 billion yuan.

Huachen Renault lasted only four years from its formal establishment in December 2017 to its bankruptcy filing in December 2021. According to the content of this latest announcement, brilliance Renault's restructuring may mean that it can continue to produce cars and continue to layout new energy vehicle business. As to whether Huachen Renault's restructuring can be reversed, or bring substantial progress, perhaps the market will give the answer soon.

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