CHINA: Shenyang Jinbei to transfer 25% SUV JV stake to General Motors for 'free'
Shenyang Jinbei Automotive Co. on Friday said it would transfer its 25% stake in General Motors' loss-making sports utility vehicle venture to Shanghai General Motors for free, Dow Jones said.
The news followed media reports on Thursday that said General Motors and Shanghai Automotive Industry Corp's 50-50 joint venture, Shanghai GM, would buy a 50% stake held by four Chinese companies in the troubled Jinbei GM plant in the north eastern city of Shenyang.
According to the Dow Jones report, though it won't be paid for the shares, Shenyang Jinbei said Shanghai GM will give it 142.8 million yuan ($US17.3 million) in compensation for a shareholder's loan it extended to the SUV venture, Jinbei General Motors Automotive Co.
Shenyang Jinbei reportedly said in its announcement in the China Securities Journal that it was transferring the shares for free due to the loss-making state of Jinbei GM, which had a negative net asset value of CNY237.8 million at the end of November.
Dow Jones said that, in the first 11 months last year, Jinbei GM posted an unaudited loss of CNY271.2 million after recording a loss of CNY460.7 million in 2002 and a loss of CNY156.5 million in 2001.
GM, which has a 50% stake in Jinbei GM will sell a 25% stake in the venture to its partner Shanghai Automotive, while GM Shanghai will take over the 50% stake held by four other shareholders, including Shenyang Jinbei, the report noted.
Dow Jones said the deal would further strengthen the co-operation between GM and Shanghai Automotive, and help ease Jinbei GM's distribution problems.
GM last year sold a record 386,710 vehicles in China, up 46.4% on year, thanks to the launch of new models, the report noted, adding that most of the sales were by the flagship joint venture with Shanghai Automotive, which sold 201,188 Buicks.
But Jinbei GM sold only 3,289 SUVs in 2003 against a production capacity of more than 30,000 vehicles a year, resulting in big losses, Dow Jones said.