Avic II unit sells Hafei Auto stake
AviChina Industry & Technology, a maker of civilian aircraft and motor vehicles, said it will transfer its stake in Hafei Auto for almost 900 million yuan (HK$847 million) to one of its vehicle engine-manufacturing units to lower costs.
The unit of China Aviation Industry Corp II, or Avic II, will sell its entire 74.81 per cent stake in carmaker Hafei Auto to its Shanghai-listed subsidiary Harbin Dongan Auto Engine, which is 70.01 per cent owned by AviChina, for 898.95 million yuan.
Dongan Auto will take full control of Hafei Auto by acquiring the remaining 25.19 per cent equity interest from China Aero, Dongan Group, Catic (China National Aero-Technology Import & Export ) and Shenzhen Shenhang Avionics for 302.69 million yuan.
AviChina said in a statement that while Dongan Auto manufactures car engines and Hafei produces mini-sized vehicles and sedans, it will be more efficient to combine their certain management functions, given that both companies are based in Harbin.
This would increase management efficiency, lower administrative and general costs, improve profitability of the vehicle business, as well as shorten the cycle for research and development of new vehicles, it said.
To finance the acquisition of Hafei Auto, Dongan Auto is proposing to issue eight rights shares for every 10 existing shares.
Assuming the rights issue price is determined at a 10 to 40 per cent discount to the average closing price a month before the announcement, Dongan Auto will raise one billion to 1.51 billion yuan from the rights issue.
The transactions are awaiting approval from AviChina shareholders.
The unit of China Aviation Industry Corp II, or Avic II, will sell its entire 74.81 per cent stake in carmaker Hafei Auto to its Shanghai-listed subsidiary Harbin Dongan Auto Engine, which is 70.01 per cent owned by AviChina, for 898.95 million yuan.
Dongan Auto will take full control of Hafei Auto by acquiring the remaining 25.19 per cent equity interest from China Aero, Dongan Group, Catic (China National Aero-Technology Import & Export ) and Shenzhen Shenhang Avionics for 302.69 million yuan.
AviChina said in a statement that while Dongan Auto manufactures car engines and Hafei produces mini-sized vehicles and sedans, it will be more efficient to combine their certain management functions, given that both companies are based in Harbin.
This would increase management efficiency, lower administrative and general costs, improve profitability of the vehicle business, as well as shorten the cycle for research and development of new vehicles, it said.
To finance the acquisition of Hafei Auto, Dongan Auto is proposing to issue eight rights shares for every 10 existing shares.
Assuming the rights issue price is determined at a 10 to 40 per cent discount to the average closing price a month before the announcement, Dongan Auto will raise one billion to 1.51 billion yuan from the rights issue.
The transactions are awaiting approval from AviChina shareholders.
posted by Smartcar Owner at 2:09 PM
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