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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.
Shares of AviChina rose 1.39 per cent to close at HK$0.73 on
Friday.grace.lam@globalchina.com
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