Creditors of parent company of BMW’s Chinese JV partner seek corporate restructuring

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SHANGHAI/BEIJING (Reuters) – Chinese group Huachen Automotive, parent company of BMW BMWG.DE Joint Venture Partner in China Brilliance Automotive Holdings 1114.HKsaid on Monday that its creditors had asked a Chinese court to restructure the company.

FILE PHOTO: BMW cars are seen at the auto terminal in the port of Dalian, Liaoning province, China January 9, 2019. REUTERS/Stringer

Huachen, owned by the Liaoning provincial government, said it was uncertain whether it would be able to begin restructuring, in a statement posted on the interbank bond market clearinghouse’s website. China Central Depository & Clearing Co.

The company said that if the court was unable to approve a restructuring plan, or if the approved plan could not be executed, the court would terminate the restructuring process and declare the company bankrupt.

Huachen defaulted on a 1 billion yuan ($151.88 million) bond last month, joining a growing number of delinquent state-owned enterprises in a development that has undermined investor confidence and rattled the market Chinese credit bonds.

Huachen faces the prospect of restructuring after Gezhi Automobile Technology Co filed a petition with the Shenyang Intermediate People’s Court for the restructuring of Huachen, Hong Kong-listed Brilliance Auto said in a filing on Sunday. exchange. It remains uncertain whether the restructuring request will be accepted by the court, he said.

The latest wave of defaults, which Goldman Sachs says is larger and includes more public companies than last year, underscores that extra care is needed to avoid getting caught up in the credit cleanup.

Bondholders view a bankruptcy restructuring by Huachen as unfavorable because they will likely end up gaining little from the process.

Huachen’s bankruptcy would have little impact on Brilliance’s operations but could disrupt planned privatization plans, Daiwa Capital Markets said in a note to clients.

Reuters reported in September that Chinese state-backed investors were considering taking Brilliance private, citing people familiar with the matter.

($1 = 6.5842 Chinese yuan renminbi)

Reporting by Samuel Shen, Andrew Galbraith, Yilei Sun and Brenda Goh; Editing by Stephen Coates and Louise Heavens

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