43 Billion Debt Brings Brilliance Auto Into Crisis: "The Company Establishes A Debt Committee To Seek Financial Support"

A debt storm has opened up the accumulated "crisis" of brilliance Automobile Group Holding Co., Ltd. (hereinafter referred to as "brilliance auto").

On August 12, a number of existing bonds of brilliance automobile fell sharply, including 19 Huaqi 01 closing down 28.65%, 18 Huaqi 01 closing down 19.93%, 17 Huaqi 01 falling 19.19%, 18 Huaqi 02 falling 18%, 18 Huaqi 03 falling 17.16%.

As for the continuous decline of its bonds, on the morning of August 13, the relevant person in charge of brilliance automobile responded in an interview with the reporter of 21st century economic report: "some bond holders follow suit, which affects the bond price of the company. On the one hand, as a state-owned enterprise in Liaoning Province, the company does not have to worry too much. On the other hand, the current financial situation is normal. "

According to media reports, creditor banks have formed a debt Committee on the current debt problems of brilliance automobile, with Everbright Bank as the main leading bank, and are still in the stage of letting creditor banks report their claims.

The above person in charge said that "the establishment of the debt committee is mainly to coordinate the relevant creditors not to withdraw loans, pressure loans, break loans, and continue to give financial support to the company, not the enterprise itself to carry out bankruptcy reorganization". However, brilliance automobile still faces a huge capital gap.

In June this year, "18 Huaqi 03" credit rating agency Dongfang Jincheng pointed out in the rating report that: by the end of March 2020, the company's total debt was 122.675 billion yuan, down 15.27% from the end of 2019, of which current liabilities accounted for 78%, and the debt structure needs to be optimized; the asset liability ratio was close to 70%, higher than the industry average level.

Dongfang Jincheng believes that the above liabilities are mainly caused by the repayment of bonds and long-term loans due within one year, while the company's interest bearing debts are relatively large in the tracking period.

From the perspective of term structure, from April to the end of December, 2020, the scale of interest bearing debt of the company is 43.267 billion yuan, accounting for 63.87% of all interest bearing debt. The company's short-term debt scale is large and there is short-term concentrated debt repayment pressure.

According to incomplete statistics, at present, there are 15 bonds in existence of brilliance group, with a scale of 17.573 billion yuan. The cashing period is mainly concentrated in 2022, and "19 Huaqi 01" and "18 Huaqi 03" are listed in the list of high implicit default rate of China securities rating.

"The actual controller of brilliance group is the state owned assets supervision and Administration Commission of Liaoning Province, and the largest shareholder is also the state owned assets supervision and Administration Commission of Liaoning Province, so the current debt problem is not a problem." The relevant person in charge of brilliance automobile told reporters.

However, affected by the above news, Brilliance China still plummeted by more than 13% in late trading on August 13. As of the end of the day, Brilliance China's share price fell 8.78% to HK $7.58/share, with a market value of HK $38.2 billion, falling to a new low in recent two years.

A debt storm has opened up the accumulated "crisis" of brilliance Automobile Group Holding Co., Ltd. Figure IC Photo

debt crisis

According to the data, as of the end of 2019, brilliance automobile has 34 first-class and second-class subsidiaries, including four listed companies, namely Brilliance China (1114. HK), Jinbei Automobile Co., Ltd. (Jinbei Automobile, 600609. SH), Shanghai Shenhua Holding Co., Ltd. (Shenhua holding, 600653. SH) and Xinchen China Power Holding Co., Ltd. (Xinchen power, 1148. HK).

As a matter of fact, before the debt crisis, brilliance auto had been deeply involved in the whirlpool of public opinions about freezing assets, selling shares and taking long-term leave of employees.

According to the public information, on May 27 this year, brilliance automobile added 7 pieces of information about the person to be executed. The execution court was Shenyang Dadong District People's court, with the execution objects of 2.11 million, 1.39 million, 76 million, 3.232 million, 1.33 million, 3.5 million and 2.1 million respectively. On July 23, Jinbei Automobile announced that Tianfeng securities applied to freeze Shenyang Automobile Industry Asset Management Co., Ltd. (the shareholder of Jinbei Automobile) There are 142000000 shares in the general securities account, accounting for 53.30% of the total shares of the company held by it. The freezing period is from July 21, 2020 to July 20, 2023.

In addition to the freezing of assets and equity, brilliance auto also sold shares this year to ease the pressure on funds. On July 14 this year, Brilliance China announced that its controlling shareholder, brilliance motor, had entered into a strategic investment agreement with Liaoning Communications investment, intending to sell 400 million shares of the company to the latter, and brilliance auto would receive HK $3.28 billion in capital.

In addition, on May 22, Brilliance China sold 200 million shares of the company to Liaoning Communications Construction Investment Group, equivalent to about 3.96% of the total issued share capital of the company.

Industry analysis shows that the reason why brilliance group has sold its shares successively is due to poor management, and through equity trading to ease the short-term financial pressure.

In view of the current financial problems of brilliance automobile, on the afternoon of August 13, the reporter of 21st century economic report repeatedly called the financial director of brilliance automobile, and the other party said that it had been in a meeting, and had not given a clear response as of the time of press release.

BMW Brilliance is the only one to save

In fact, the debt crisis is only an inevitable result of brilliance's poor management in recent years. Due to brilliance's excessive dependence on joint venture plate, in the tide of structural adjustment of China's automobile market, the development of independent plate has always been weak.

In sharp contrast to the sharp increase in sales of BMW Brilliance, the sales of brilliance automobile in 2019 is dismal, with the annual sales of 41000 vehicles of brilliance golden cup, a sharp drop of 82.36%; while the annual sales of Chinese brands are only 25300, a decrease of 78.29% compared with the same period in 2018.

In 2015, the net profits of BMW, brilliance and brilliance were RMB 3.633 billion and RMB 3.633 billion respectively.

However, according to the annual report of Brilliance China in 2019, the annual revenue of brilliance automobile group is 4.027 billion yuan, while the profit before tax is 6.292 billion yuan. The secret of the profit before tax higher than the revenue lies in the contribution of BMW Brilliance. Without BMW Brilliance's contribution of 7.626 billion yuan, Brilliance China's profit loss before tax in 2019 will be 1.334 billion yuan.

Since this year, affected by the new crown pneumonia epidemic, Brilliance China sold only 3186 vehicles in the first half of the year, and rumors of long-term holiday for front-line employees continued.

In this regard, the relevant person in charge of brilliance automobile said that the rumor was not true, and provided a video of interior decoration workshop operation shot in the morning of August 13. The video shows that several workers in the workshop are working around several off-line bodies.

Dilemma to be solved

In the past few years, brilliance has not given up seeking a way out under the condition of weak independent plate, lack of new products and declining brand power.

A few days ago, the national enterprise credit information publicity system showed that brilliance Automobile Group Holdings Co., Ltd. added foreign investment to establish brilliance Travel Service Co., Ltd., which was registered on June 29 with a registered capital of 100 million yuan.

Prior to this, Yan Bingzhe, chairman of brilliance auto, has publicly stated that brilliance Automobile Group will work with online car Hailing platform, big data professional companies, banks, insurance, investment and other financial institutions to build a smart travel platform and accelerate the transformation from automobile manufacturers to mobile travel solution providers.

However, under the current debt pressure, whether brilliance still has the opportunity and how much chance to complete the transformation is unknown.

"After two years of negative growth, the whole China's automobile industry is not the same as that of the previous decades. The high growth stage has passed, and the automobile industry is also an industry of scale economy. Once there is no growth, it will meet the decline of profits." Cao he, President of quanlian auto Investment Management (Beijing) Co., Ltd., said that in the past decade or so, China's automobile industry has been emphasizing the adjustment of structure, production concentration or market concentration. However, brilliance has not been pushed to the life and death line by the market, so it has no power to adjust or reform.

"The negative growth of the first two years superimposes this year's epidemic, and many enterprises may not be able to go down in these two or three years." Cao he said.

On the one hand, according to the agreement signed between brilliance auto and BMW Group on October 11, 2018, Brilliance will sell 25% equity of brilliance BMW to BMW group before 2022, with a transaction price of RMB 29 billion. According to this agreement, BMW Group and brilliance auto respectively hold 75% and 25% shares of BMW Brilliance after the share ratio adjustment is completed, and BMW Brilliance will no longer be included in the scope of brilliance auto merger.

Once the share ratio is reduced to 25%, Brilliance China's profit from the joint venture will be greatly reduced, the company's operating conditions will also be affected, and its value in the capital market will be reassessed.

However, from the current situation of brilliance automobile, it has not launched competitive products, and its brand power is also declining.

On the other hand, for the future of brilliance, the attitude of its major shareholder, Liaoning SASAC, is very important.

"The specific debt situation of brilliance automobile is unified and coordinated by the provincial SASAC. In view of brilliance's problems, a committee has been set up in the committee, but the specific name is not clear." On the afternoon of August 13, when the reporter called the state owned assets supervision and Administration Commission of Liaoning Province on the debt problem of brilliance automobile, relevant people from the state owned assets supervision and Administration Commission of Liaoning Province told reporters.

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