AutoBeta(AutoBeta.net)08/08 Report--

On August 8, brilliance China Automotive Holdings Limited (hereinafter referred to as "brilliance China") issued a notice saying that on August 3, officers of the Hong Kong Independent Commission against Corruption (ICAC) visited the company's main place of business in Hong Kong to execute a search warrant. on the same day, Wu Xiaoan, executive director and chairman of the board of directors, was detained by the ICAC for investigation, suspected of violating section 9 (1) (a) of the Prevention of bribery Ordinance, Chapter 201 of the laws of Hong Kong. Wu Xiaoan was released on bail without prosecution on August 4. The Board is of the view that, as at the date of this announcement, the ICAC investigation did not have a significant adverse impact on the Group and the Group's business and operations remained normal. The company will seek legal advice on the ICAC investigation in due course.

According to information, Wu Xiaoan has been chairman of the board of directors of brilliance China since June 18, 2002, and has been an executive director since January 11, 1994. he is also a member of Hua Chenguo Remuneration Committee, nomination Committee and subsidiary Executive appointment Committee. Wu Xiaoan has 28 years of experience in the automotive industry and is mainly responsible for the overall strategic planning and business development of brilliance China, serving as chairman of BMW brilliance from May 2003 to February 2022 and vice chairman of BMW brilliance since February 2022. He was a director of Huachen Renault from January 1994 to August 2016 and the chairman of Huachen Renault since January 2018.

In February this year, Wu Xiaoan was punished for illegal information disclosure by brilliance Group. According to the official website of the China Securities Regulatory Commission, it has been found that there are the following illegal facts in brilliance Group: first, there are false records in the annual reports of 2017 and 2018 disclosed by brilliance Group; second, brilliance Group fraudulently obtained approval of public issuance of corporate bonds with false declaration documents; third, brilliance Group disclosed false records of non-public corporate bonds. Based on the above illegal facts, Wu Xiaoan, the then director of brilliance Automobile Group, was fined 200000 yuan.

On August 2, the Shenyang Intermediate people's Court approved the substantive merger and reorganization plan of 12 enterprises, including brilliance Automobile Group Holdings Co., Ltd., and terminated the reorganization procedures of 12 enterprises, including brilliance Group. According to the announcement, Shenyang Automobile Co., Ltd. will own 100% of brilliance Group and become the indirect controlling shareholder of Jinbei Automobile, and the actual controller will be changed to the State-owned assets Supervision and Administration Commission of the Shenyang Municipal people's Government.

Shenyang Automobile was set up by the local government to reorganize brilliance Group, which was established on February 21, 2023. Equity penetration shows that the actual controller of Shenyang Automobile is the Shenyang SASAC, while Jinbei Automobile and Shenhua Holdings disclosed in the announcement that Shenyang Automobile was set up to develop the Shenyang automobile industry. According to the agreement, Shenyang Automobile undertakes assets in addition to Jinbei Automobile and Shenhua Holdings, two A-share listed companies, as well as brilliance China, a Hong Kong-listed company. This means that after the adoption of the relevant restructuring procedures, the actual controller of brilliance Group will be changed from Liaoning SASAC to Shenyang SASAC.

In November 2020, the Shenyang Intermediate people's Court ruled to accept the creditor's application for the reorganization of brilliance Automobile Group holding Co., Ltd., marking that the car company has officially entered the bankruptcy reorganization process. In March 2021, the Shenyang Intermediate people's Court ruled that 12 enterprises including brilliance Group should be tried by substantive merger and reorganization, and appointed the manager of brilliance Group as the substantive merger and reorganization manager of 12 enterprises, including brilliance Group.

At present, brilliance Group's largest joint venture in China is brilliance BMW, which is also the main source of group income, in addition to brilliance China, brilliance Renault and other brands, but from the company structure, the current brilliance vehicle business except brilliance BMW, the rest has basically disappeared.

In May 2003, brilliance China Automobile Holdings Co., Ltd. and BMW Group jointly established brilliance BMW Motor Co., Ltd., each holding 50%. The decline of brilliance Group has also given BMW an opportunity to take advantage of its new license. BMW Group's shareholding in brilliance BMW has increased from 50% to 75%. This also marks that BMW will have more decision-making power in the operation of the joint venture. Brilliance's influence will be further weakened, and its profits from the joint venture will be greatly reduced, which will undoubtedly aggravate the group's financial crisis. The net profit contributed by brilliance BMW fell by 83.6 per cent to 2.38 billion yuan in 2022 from 14.515 billion yuan in 2021, mainly due to the reclassification of BMW brilliance from a joint venture into an associate after the sale of 25 per cent equity interest in BMW to BMW took effect in February 2022.

Shenyang State-owned assets will participate in and lead the restructuring of brilliance Group this time, which will have a positive impact on the development of the local economy, employment and related industries, and can also help brilliance Group to solve operational difficulties and maintain the stability and development of the enterprise, so as to maintain the stability of local employment and related industrial chains, but how to continue to give full play to the advantages of leading enterprises in subdivision fields such as brilliance BMW and Jinbei Automobile, and invigorate the local automobile industry chain. Attracting more investment to promote local economic development is the next priority for Shenyang Automobile and Shenyang SASAC to consider.

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