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FAW to sell mini car production unit at $42,500.

March 21, 2008 – China’s FAW Group Corporation plans to sell 100% stakes of its subsidiary FAW Huali (Tianjin) Motor Co. for RMB 300,000 ($42,461), Chinese newspaper National Business Daily reported.

The report said the total assets of FAW Huali were evaluated at RMB 789 million ($112 M), while net assets totaled 242,500 yuan ($34,323). Last year company lost RMB 131 million ($18.4 M).

The seller says buyers must meet two prerequisites: First, the buyer must be a domestic OEM automaker with a registered capital of no less than RMB1.6 billion ($226.62 million) and the buyer must be able to turn FAW Huali into a 150,000 sedan maker; secondly, the buyer will be responsible for all FAW Huali liabilities.

FAW Huali was established in June 2002 and has a capacity of 180,000 vehicles annually. Its main products include Toyota Vela, Daihatsu Terios and minivans and some own brand electric passenger cars. The automaker has been losing money for years before its production was halted one year earlier.
source: Gasgoo.com
 

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FAW Huali's potential buyer has emerged.

April 1, 2008 - FAW Huali (Tianjin) Motor Co. is reported to be bought by another FAW subsidiary -- FAW Tianjin Xiali Automobile, leaving other pursuers almost out of the competitions, Chinese newspaper Economic Observer reported on Monday.

The newspaper cited an unnamed Xiali official as saying that Huali has already chosen Xiali as its prospective buyer, and now the two sides are just waiting for goving through the legal formalities of the takeover.

FAW announced on March 21 that it would sell 100% stakes of its subsidiary FAW Huali for RMB 300,000 ($42,461) at Tianjin Property Exchange Center on April 15.

The report said the total assets of FAW Huali were evaluated at RMB 789 million, while net assets totaled RMB 242,500. Last year company lost RMB 131 million.

The seller says buyers must meet two prerequisites: First, the buyer must be a domestic OEM automaker with a registered capital of no less than RMB1.6 billion and the buyer must be able to turn FAW Huali into a 150,000-sedan maker; secondly, the buyer will be responsible for all FAW Huali liabilities.

FAW Huali was established in June 2002 and has a capacity of 180,000 vehicles annually. Its main products include Toyota Vela, Daihatsu Terios and minivans and some own brand electric passenger cars. The automaker had been losing money for years before its production was halted one year earlier.
source: Gasgoo.com
 

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FAW Huali is sold to FAW Xiali for $42,900.

April 16, 2008 - FAW Huali (Tianjin) Motor Co has finally been purchased by Tianjin FAW Xiali at a price of 300,000 yuan ($42,909), FAW Xiali made an official announcement yesterday.

FAW Xiali said it had bought 100% stakes of FAW Huali for 300,000 yuan at Tianjin Property Exchange Center as scheduled.

While the stake purchase deal hardly inked, FAW Xiali has unveiled another expansion plan to launch seven new models within the next five years, with production capacity rising from 200,000 units to 400,000 units by 2013.

Earlier report said the total assets of FAW Huali were evaluated at 789 million yuan, while net assets totaled 242,500 yuan. Last year the company lost 131 million yuan.

Though the acquisition can help boost FAW Xiali's capacity quickly, analysts from China Merchants Securities say it’s unnecessary for FAW Xiali to buy an idle company since it is able to do it on its own.
source: Gasgoo.com
 

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I don't get it. Caixinglobal.com says: FAW Xiali Automobile Co.Ltd. wants to dump one of its money-losing car units..." . But it's FAW Xiali itself that is the current money-losing carmaker for parent FAW. I thought that we read elsewhere, in the latest article on Guoqi, that FAW was going to finally sell off the distressed Xiali, which it purchased in 2002.
As for Huali, I thought it had been out of production for some 10 years now and that the production facility had been converted for manufacture of FAW's Junpai model.
 

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I see the Caixinglobal article is now behind a paywall. It wasn't when I read the article in the morning.
___________

Anyway, Huali currently is not a car-making unit, however it has revenues and losses, thus it has a revenue stream probably from providing some auto-related services. Remember it was identified as a "zombie" enterprise not long ago and was listed for potential deletion. However, it has a car production qualification independent of Xiali.

Huali has "production addresses'" at two locations, meaning it has access to two plants. One is on Jingfu Highway near Yangliuqing Town in Xiqing District, Tianjin, which is the same location as FAW Xiali's plant. The premises no. is 576 for Huali and 578 for Xiali. The Junpai range is made here. The greater complex also houses the Tianjin FAW Toyota works in another section. Whether the buyer will retain any of Huali's rights to production at the Xiali plant is unclear. That should depend on the original agreements between Xiali, Huali and FAW Group at the time of acquisition in 2008.

Huali's second plant is near Hanjiashu Village in Beichen District, also in Tianjin. This has been dormant and no car is made here. Huali possesses some housing assets and land, so probably also gets rent and service income as revenue. These landed assets are worth 232 million RMB which will be transferred to Xiali when the sale is concluded.

Yes, Xiali too is loss-making so is cleaning up its own balance sheet by this sale. The buyer is offered Huali at "not less than 1 yuan" but the buyer also has to assume liabilities of 1.12 billion RMB of which it has to guarantee repayment of 800 million RMB before purchase. Since Huali is 100% owned by Xiali, this will take off at least that much debt off its own books. That is why many articles are saying that this 800 mn RMB is the "price" of acquiring Huali's production qualification.

http://stock.jrj.com.cn/2018/07/21021324845052.shtml

Note: The number 亿 equals 100 million (10^8) but is often erroneously translated as billion (10^9).
 

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Thank you DMitra for the insight into Huali's fate since the Xiali takeover in 2008.

Dong Mingzhu, the chairwoman of Gree, a leading Chinese appliance maker, made overtures to purchase Xiali in 2017, with a plan to produce NEVs, but the deal fell through.
http://www.chinadaily.com.cn/business/2017-09/19/content_32198882.htm
With losses that have gone on for years, it's no wonder that FAW would like to unload the Xiali dead weight. Also of note is that Qin Huanming, a former president at the FAW-VW joint venture, was appointed chairman of Xiali in November 2016, and then resigned in June 2017....., for "personal reasons".
Can privatization save this historic automaker, originator of the ubiquitous (Daihatsu-based) Xiali Charade taxicab that once plied the streets of Beijing and the adjoining region?
 
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