Focus on | BMW Brilliance equity adjustment "out of contract" BMW China: the increase in holdings is not affected by Brilliance restructuring

Economic Observation Network reporter Zhou Ju "There is currently no content to share, if there is news will be the first time to notify." With the bell ringing in 2022, BMW Brilliance's original equity adjustment plan has also been announced that it has not been implemented as scheduled. In response to the progress of BMW Automobile's increase in the equity of the joint venture BMW Brilliance, BMW China insiders made the above response to the Economic Observer Network reporter.

According to the agreement signed between BMW and Brilliance in 2018, bmw will acquire a 25% stake in BMW Brilliance from Brilliance Auto for 3.6 billion euros by 2022, at which time BMW and Brilliance Auto will hold 75% and 25% of BMW Brilliance respectively, and BMW will become the largest shareholder of BMW Brilliance and the first multinational luxury car brand to hold a joint venture car company.

Now the agreed time has passed and the barriers at the policy level have been removed. On December 27, 2021, the 2021 version of the Negative List for Foreign Investment Access was released, stipulating that from January 1, 2022, China will remove the restriction on foreign ownership in passenger car manufacturing and the restriction that the same foreign investor can establish two or less joint ventures in China to produce similar vehicle products.

However, BMW's increase in BMW Brilliance has not moved so far. On December 31, 2021, BMW Brilliance insiders said in an interview with the Economic Observer that due to the equity involved, this question is more suitable for shareholders to answer. BMW China replied that there is currently no content to share. According to the current data of Qixinbao, the equity of BMW Brilliance has not changed, and it is still 50% of Brilliance and BMW.

The industry's view is generally that BMW's increase in BMW Brilliance has not landed in the expected time, and the biggest reason may be that BMW Brilliance's shareholder, Brilliance Group, is still in the stage of bankruptcy reorganization.

Due to the debt storm, Brilliance Group entered the bankruptcy reorganization process in November 2020, but until now, Brilliance Group's restructuring plan has not been released for a long time, and it has been postponed twice to June 3, 2022. The repeated postponement of the draft reorganization plan has added a lot of uncertainty to Brilliance's bankruptcy reorganization, and it is also believed that it may affect the process of BMW's increase in BMW Brilliance's equity.

However, at the beginning of Brilliance's bankruptcy, BMW made it clear that its increase in shares in BMW Brilliance, a joint venture in China, would not be affected by the debt problems of the latter's parent company, Brilliance Auto Group. "There is currently no indication that the validity of these (equity adjustment) contracts will be limited by the current situation. The operations of the BMW Group and its joint venture BMW Brilliance are not directly affected by the difficulties of debt payment of the Brilliance Automotive Group. At that time, foreign media quoted a BMW representative as saying.

"The increase in holdings will not be affected by brilliance bankruptcy reorganization." The above-mentioned BMW China insider still said this to the Economic Observer reporter on December 31, 2021.

It is worth noting that as BMW's assistance to Brilliance's bankruptcy and restructuring, BMW's acquisition of Brilliance Automobile Manufacturing Co., Ltd. (hereinafter referred to as Brilliance Manufacturing) is not going well. In December 2021, some media quoted a statement from an insider of Brilliance Group as saying, "The acquisition of bmw by the Zhonghua (Brilliance's own brand passenger car) factory has been stopped, and the BMW-related staff in the Chinese workshop has been withdrawn." However, BMW China said in an interview with the media that BMW will continue to promote this project in accordance with national policies.

As for the reasons for the fluctuations that may occur in BMW's acquisition of Brilliance Manufacturing, there is news in the industry that FAW Group has participated in the restructuring process of Brilliance Manufacturing and even Brilliance as a whole, and this news has not been officially confirmed at present. It remains to be seen whether the uncertainty faced by Brilliance's restructuring and whether this will affect BMW Brilliance's increase in holdings.