SAIC Asset Restructuring

SHANGHAI, Dec 3 (Reuters) - SAIC Motor Corp (600104.SS) said on Thursday trading in its shares has been suspended on the Shanghai Stock Exchange as it plans a major asset restructuring.

SHANGHAI — China's largest car maker SAIC Motor Corp said Thursday its shares have been suspended from trading pending an announcement on a "major assets restructuring".

The company's board of directors will hold a meeting before next Wednesday to discuss the planned restructuring, SAIC said in a statement to the Shanghai Stock Exchange.

SAIC shares, which closed down 0.04 percent at 25.53 yuan (3.8 dollars) on Wednesday, will resume trading after the plan is announced, SAIC said, without elaborating.

The plan could relate to a change in the shareholding structure of SAIC's joint ventures, the official China Securities Journal reported Thursday, citing unnamed sources.

SAIC currently owns half of its joint ventures with US auto giant General Motors and German car maker Volkswagen.

It is also the controlling shareholder in SAIC-GM-Wuling, a commercial vehicle tie-up with General Motors and China's Liuzhou Wuling Automobile.

Officials at Shanghai-based SAIC Motor were not immediately available for comment

Windy wrote:China Car Times has some speculation: http://www.chinacartimes.com/2009/12/03/trading-in-saic-shares-suspended-major-announcement-due-soon/

Shares in Shanghai Automotive Industry Corporation (SAIC) were
suspended today amid plans which will see a major restructuring program
at SAIC.
SAIC shares fell 0.04% to 25.3rmb.

SAIC chairman, Mr. Chen Hong, has previously mentioned his strong
interest in taking over LDV, and producing the van range in China
whilst having the UK Longbridge factory assemble CKD kits of the vans
alongside the soon to be produced MG6.

patpending wrote:

SAIC shares fell 0.04% to 25.3rmb.

well, that's not a very good suspension, then!

patpending wrote:
Are the rights to LDV not currently in a separate non-SAIC company?

Windy wrote:

patpending wrote:
Are the rights to LDV not currently in a separate non-SAIC company?

I think that is unknown, we know LDVs assets where bought by Dr Li Qu but we don't know who owns "Eco Concept Limited", the company that bought them. "Eco Concept Limited" is not Dr Li's "China Ventures Ltd", it is another company set up around the time Nanjing Auto got involved in the SAIC - MGR joint venture.

I believe it is the parent company that is being restructured so the reasons could be connected with Ssangyoung, a new joint venture in India, or the other Joint Ventures. It could also involve a reduction in state ownership. An announcement is needed...

BEIJING, Dec 3 (Reuters) - General Motors [GM.UL] has agreed to sell half its Indian operations and a stake in its Chinese business to China's SAIC Motor Corp (600104.SS), the New York Times said on Thursday.
The report said the information came from "people with a detailed knowledge" of the deal.

HONG KONG — General Motors has reached an agreement to sell half of its India operations and a small stake in its China business to its main joint-venture partner in China, in exchange for cash and an increased stake in a second Chinese venture, people with a detailed knowledge of the transaction said on Thursday evening.
...
G.M.’s international operations have been in a quiet but intense search for cash in the last month to cover losses incurred when its South Korean subsidiary, Daewoo, made a costly bad bet on financial derivatives based on the Korean won. G.M.’s lawyers advised Daewoo that it could not raise money from the company’s American operations because of the large role the United States government still played after G.M.’s recent bankruptcy and refinancing.
...
Michael Dunne, an auto consultant specializing in Asian markets, said that for G.M. to accept a minority holding in its main joint venture marked an inevitable decline in G.M.’s influence in China, which has overtaken the United States as the world’s largest auto market.

“Dropping below the 50-50 partnership is huge — there may be a way to preserve voting rights, but symbolically, it is a step down,” Mr. Dunne said.
...

HONG KONG — General Motors has reached an agreement to sell half of its
India operations and a small stake in its China business to its main
joint-venture partner in China, in exchange for cash and an increased
stake in a second Chinese venture, people with a detailed knowledge of
the transaction said on Thursday evening.

patpending wrote:what that?

("General Motors, Shanghai Automotive Formed New 50-50 JV," published at 0833 GMT, misstated the joint venture was formed with SAIC Motor's parent company in the first and fourth paragraphs. The correct version follows:)

BEIJING (Dow Jones)--General Motors Co. and SAIC Motor Corp. (600104.SH) said Friday they have set up a 50-50 joint venture in Hong Kong to support expansion into emerging markets, starting with India.

In addition, GM is transferring 1% of its stake in Shanghai General Motors Corp., its flagship passenger vehicle-making joint venture in China, to its partner SAIC Motor, the companies said in a statement. The joint venture was previously split 50-50.

This will assist SAIC Motor in consolidating Shanghai GM revenue into SAIC, the statement said.

GM and SAIC Motor plan to establish a joint venture in India by the first quarter of 2010, to make small cars from Shanghai GM and mini-commercial vehicles from SAIC-GM Wuling Automobile Co.

Rise Of The Chinese Dragon Continues: GM To Sell Stake To Chinese Partner

If anything has changed across the world due to the economic roller coaster of the last two years, it is the steady decline of the American corporation, and the corresponding rise of the Chinese one. The latest indication of this turnaround has been the announcement, albeit unofficial, of bankruptcy hit General Motors selling a part of its business in Asia to its Chinese counterpart. Sources close to the Shanghai Automotive Industrial Corporation or SAIC, which is GM’s partner in China, claim that the latter has sold a part of its Chinese stake and the India operations to the former for an estimated $400 million dollars. The SAIC suspended trading of its shares on the Shanghai Stock Exchange pending the official announcement.

GM’s international operations have been under pressure to find a buyer ever since the majority owned Korean Daewoo Motors lost a whopping $2 billion on a currency derivative deal and the recent economic downturn. As the company’s recent bankruptcy prevents the American operation from funding the international division, the latter had no option but to offer a stake to outside firms in order to bring in much needed liquidity.

Analysts say that GM is paying a high price to retain control of Daewoo, whose small car designs GM sees as critical in the scenario that oil prices continue to range above $70 a barrel. In exchange, GM is sacrificing control of two of the world’s fastest growing automobile markets. In china, The company will sell a 1 per cent stake of the JV to SAIC, making the relationship 51:49 in favour of the latter, effectively ceding management control though the company claims voting rights will remain on par, as before, and it will have an option to buy back the 1 per cent at a later date. At the same time, the Indian operation will be put into a fresh JV with SAIC.

Apart from the JV with SAIC, GM’s presence in China includes Wuling, which is a light commercial vehicles and van manufacturer. The American firm has a 34 per cent stake in Wuling, and SAIC owns 50.1 per cent. Wuling has a strong potential in India, as it has established models which are sold as goods and passenger carriers in rural China with price tags in the range of $4,000 (Rs. 1,80,000 approx.)

GM’s surrender of control of its Asian markets represents the nadir of the company’s history in automotive history. In China, the JV is the second largest manufacturer after Volkswagen, while in India it is the fifth largest in terms of capacity. GM has been struggling in this market, selling higher priced cars in a market where basic automotive needs are still being fulfilled. Wuling’s entry into India would be facilitated by GM’s presence in the country, claim analysts. The $400 million generated by the stake sale should help the international division of GM to maintain its market position and continuity of business operations.