According to a filing in a Chinese court, the Chinese JV partner of BMW, Brilliance Automotive Holdings, stated, its parent, Huachen Automotive Group, may undergo restructuring following a creditor approaching a Chinese court to recover sums.
Huachen is owned by the government of Liaoning province. Last month, the company defaulted on a $151.88 million (1-billion-yuan) bond joining a growing number of delinquent state firms that have hit investor confidence and have roiled China’s credit bond market.
Following Gezhi Automobile Technology Co filing an application with the Shenyang Intermediate People’s Court for restructuring of Huachen, the parent of BMW’s JV partner faces prospects of restructuring, said Hong Kong-listed Brilliance Auto in a filing with the Hong Kong stock exchange on Sunday.
It remains to be seen whether the application for restructuring the company will be accepted by the court.
Bondholders see a bankruptcy restructuring by Huachen as unfavourable since they are likely to get little out of the proceedings.
In a note to clients, Daiwa Capital Markets said Huachen’s bankruptcy is likely to have little impact on Brilliance’s operations but could potentially upset its plans for an planned privatization.
Huachen declined to comment.
($1 = 6.5842 Chinese yuan renminbi)
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