AutoBeta(AutoBeta.net)11/03 Report--

Brilliance Automobile Group, once a well-known independent car company, is now in trouble because of its huge debt. Brilliance auto funding crisis broke out as a result of failing to repay maturing bonds on schedule. On November 2, the Shanghai Stock Exchange issued a notice giving a written warning to brilliance. According to media reports, the Liaoning provincial government is said to be considering promoting judicial restructuring of brilliance Automobile Group.

Brilliance Automobile Group confirmed in an announcement that the 1 billion yuan private bond "17 Huaqi 05" could not be repaid on schedule. Brilliance was supposed to transfer the principal 1 billion yuan, interest 53 million yuan and corresponding handling fee of 17 Huaqi 05 to a designated bank account before 16:00 on October 21, but the transfer had not been completed as of 17:00 on October 22, 2020.

The default of "17 Huaqi 05" bond is the first time that brilliance Automobile Group has defaulted on an open market bond.

Brilliance Automobile Group said that at present, the company is still trying to raise funds, but due to liquidity constraints, funds are facing greater difficulties, whether the full amount of funds can be raised in time is a major uncertainty. In response to the media, the company also said: "at present, there are indeed temporary difficulties in funding, so we are unable to repay the maturing bonds on schedule. The group is actively working on solutions, and I believe brilliance will actively solve the bond problem."

On November 2, the Shanghai Stock Exchange announced a written warning to brilliance Automobile Group, involving irregularities such as untimely disclosure of information and failure to give risk reminders on time.

The announcement shows that brilliance has failed to disclose in time the self-regulatory measures that the company was criticized by the bourse on August 21, 2020; failed to fulfill the obligation of information disclosure and prompt the risk with regard to the company's liquidity risk and failure to repay 17 Huaqi 05 principal and interest funds in time and in full. Failed to disclose and respond to major market rumors such as the establishment of a creditors committee by the bank to deal with the company's debt problems, layoffs and shutdowns in some of the company's factories; failure to disclose relevant irregularities such as failure to pay off maturing debts on time. The above actions violated the relevant regulations, and the Shanghai Stock Exchange gave a written warning to the company.

According to official data, brilliance Automobile Group holding Co., Ltd. is a key state-owned enterprise under the Liaoning Provincial State-owned assets Supervision and Administration Commission, with its headquarters located in Shenyang, Liaoning Province. At present, brilliance has six vehicle manufacturers, two engine manufacturers and a number of spare parts manufacturers in Liaoning, Sichuan and Chongqing, and has four listed companies (brilliance China Automobile Holdings Co., Ltd., Shanghai Shenhua holding Co., Ltd., Jinbei Automobile Co., Ltd., Xinchen China Power Holdings Co., Ltd.). The existing staff of 47000 people, total assets of more than 190 billion yuan. The company has three independent brands of "China", "Golden Cup" and "Huasong" and two joint venture brands of "brilliance BMW" and "brilliance Renault". The products cover the field of passenger vehicles and commercial vehicles.

Brilliance Automotive Group's bond semi-annual report for 2020 shows that the group has a total debt of 132.844 billion yuan, with an asset-liability ratio of 71.4% after deducting goodwill and intangible assets. The balance of cash and cash equivalents at the end of the period is 32.677 billion yuan.

Brilliance China's performance report for the first half of 2020 shows that its revenue is 1.45 billion yuan, but its net profit is as high as 4.045 billion yuan. Excluding the net profit of 4.383 billion yuan contributed by BMW brilliance, brilliance China will lose 338 million yuan. It means that brilliance China mainly relies on brilliance BMW's "blood transfusion" to achieve large profits.

In 2019, brilliance BMW contributed 7.626 billion yuan to brilliance China's profit, while brilliance China's independent business lost 864 million yuan.

Brilliance independent business development is in the doldrums in recent years, brilliance China, Golden Cup brand, Huasong brand are gradually talking about the market, its products are derailed from the mainstream independent car products. China V3, V6 and V7, which are supported by brand sales, now have only double-to triple-digit sales figures.

Brilliance's serious decline in independent business has led to continued losses, and the emergence of debt problems has also aggravated the corporate crisis.

As early as August this year, brilliance Automobile Group had already exposed the financial crisis. Since then, Shenyang Financial Regulatory Bureau and Liaoning Provincial Banking Supervision Association have taken the lead in establishing the brilliance debt Committee, with Everbright Bank as the main lead bank. At that time, the relevant person in charge of brilliance Group said, "the main purpose of setting up the debt committee is to coordinate the relevant creditors not to draw loans, suppress loans, and cut off loans, but to continue to give financial and financial support to the company, not to carry out bankruptcy reorganization of the enterprise itself."

However, according to media reports on Nov. 3, people familiar with the matter said that the Liaoning provincial government is considering promoting judicial restructuring of brilliance Automobile Group Holdings Co., Ltd. to solve the debt problem. The Liaoning provincial government has recently communicated with the financial regulatory authorities on this. At present, there is no clear restructuring plan, and related issues are still under discussion, so there are still uncertainties. As to whether the Liaoning provincial government is considering judicial restructuring of brilliance Automobile Group, staff of the office of Liaoning State-owned assets Supervision and Administration Commission and relevant people of brilliance Group responded to the media that they had not received the relevant information.

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