Brilliance has said that its controlling shareholder will inject about CNY500m (US$72.7m) into the company in an effort to improve its liquidity and cash flow situation.
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The Chinese minibus and car maker, BMW’s partner in China, said it would sell 1.314 billion new shares, or 26.36 percent of its enlarged share capital, at HK$0.43 apiece to controlling shareholder Huachen Automotive Group Holdings.
Brilliance said the net proceeds to be raised would be used to reduce debt and contribute to the working capital of its 51%-owned joint venture Shenyang Brilliance JinBei Automobile.
“The subscription will provide the group with additional cash to strengthen its financial position, and to better equip the group in weathering through the current economic downturn,” chairman Wu Xiao An said in the statement.
Huachen, which is wholly owned by the Liaoning Provincial Government, will increase its stake in Brilliance to 55.38% after the deal from the current 39.41%.
Cash flow troubles at Brilliance are another sign of problems in the Chinese auto market being caused by a rapid downturn in demand and over-supply.
