The Brilliance Group, which was in deep debt crisis, was gradually pushed into bankruptcy and reorganization.
On November 16, Brilliance Automobile Group Holdings Co., Ltd. (abbreviated as "Brilliance Group") issued an announcement stating that at present, Brilliance Group has constituted a total debt default amount of 6.5 billion yuan and a total amount of overdue interest of 144 million yuan.
Regarding the debt crisis that has continued to this day, Brilliance Group explained that due to the shortage of corporate funds, the renewal credit approval has not been completed, resulting in failure to repay.
This debt default has had an impact on the production and operation of Brilliance Group's headquarters, resulting in a deterioration in the financial situation and greatly affecting the solvency.
Just a few days ago, Gezhi Automobile Technology Co., Ltd. filed an application for bankruptcy and reorganization of Brilliance Auto on the grounds that Brilliance Group could not pay off its due debts and its assets were insufficient to pay off all the debts and had a high restructuring value.
Although Brilliance Group stated that it is still uncertain whether the application can be accepted by the court, the bankruptcy reorganization of Brilliance Group is considered to be a high probability event from outsiders.
Shockwave of bankruptcy and reorganization: the territory involves more than 100 companies, and the announcements of listed companies may be affected
As the main force of my country's automobile industry, the history of Brilliance Group behind BMW Brilliance can be traced back to 1949.
Brilliance Group is a key state-owned enterprise subordinate to the State-owned Assets Supervision and Administration Commission of Liaoning Province. At present, Brilliance Group has 6 vehicle manufacturers, 2 engine manufacturers, and multiple component manufacturers in Liaoning, Sichuan and Chongqing. Its subsidiaries include Brilliance China, Jinbei Automobile Co., Ltd. (hereinafter referred to as "Jinbei Automobile"), Shanghai Shenhua Holdings Co., Ltd. (hereinafter referred to as "Shenhua Holdings") and Xinchen China Power Holdings Co., Ltd. (hereinafter referred to as "Xinchen Power") are listed The company has more than 160 wholly-owned, holding and share-holding companies.
In addition, its own brands such as "Zhonghua", "Jinbei" and "Hua Song" and joint venture brands such as "BMW Brilliance" and "Brilliance Renault" cover all areas of passenger cars and commercial vehicles.
The storm of bankruptcy and reorganization has been transmitted to listed companies.
On the evening of November 15, Shenhua Holdings and Jinbei Automobile successively issued announcements stating that the company’s indirect controlling shareholder Brilliance Group received a notice from the Shenyang Intermediate Court on November 13, and Brilliance Group’s creditors applied for an application by Automotive Technology Co., Ltd. Reorganize Brilliance Group.
Shenhua Holdings said that if Brilliance Group enters the reorganization process, it may have a certain impact on the company's equity structure.
However, the announcement indicated that Brilliance Group has not yet received the Shenyang Intermediate Court's ruling on formal acceptance of the reorganization. Whether the creditor's application for reorganization has been accepted by the Shenyang Intermediate Court and whether Brilliance Group enters the reorganization process remains a major uncertainty.
It is reported that Brilliance Group directly and indirectly holds 446 million shares of Shenhua Holdings, accounting for 22.93% of the total share capital. The frozen shares account for 24.13% of its total holdings and 5.53% of Shenhua Holdings' total share capital.
In terms of performance, Shenhua Holdings stated that the receivables from Brilliance Group and its related parties were 140 million yuan, mainly due to the daily purchase and sale of automobiles; the balance of guarantee provided by Shenhua Holdings to Brilliance Group and its related parties was 445,654,800 yuan, of which 4 100 million yuan is the counter-guarantee provided by the company to Brilliance Group’s financing guarantee for the company, and 45.654 million yuan is the survival guarantee provided by the company to the atomic company Brilliance Leasing. If Brilliance Group enters the reorganization process, it may have a certain impact on the annual performance of Shenhua Holdings .
Another indirectly controlled company Jinbei Automobile stated in the announcement that Shenyang Automobile Industry Assets Management Co., Ltd., a wholly-owned subsidiary of Brilliance Group, holds 266 million shares of Jinbei Automobile, accounting for 20.32% of the company’s total equity, of which 100 million shares are used for financing. The securities lending accounted for 37.53% of its total holdings of Jinbei Auto, 73.6 million shares were in judicial freeze, accounting for 27.63% of its total holdings of Jinbei Auto.
Jinbei Automobile’s account receivable from Brilliance Group was RMB 50.07 million, and its receivable from Brilliance Renault Jinbei Automobile Co., Ltd. was RMB 26.77 million, both of which were formed by the purchase and sale of daily auto parts.
If the Brilliance Group enters the reorganization process, Jinbei Auto may make a large provision for bad debts; in addition, there is uncertainty about whether the guarantee balance provided by Brilliance Group and its related parties is smoothly lifted.
On November 16, Jinbei Auto and Shenhua Holdings both went low at the opening.
As of the end of the afternoon, Jinbei Automobile expanded its decline to 7.13% to 5.21 yuan; Shenhua Holdings fell 0.53% to close at 1.88 yuan.
However, on the 17th, Shenhua Holdings and Jinbei Auto closed up, rising by 1.05% and 0.19%.
As of the close of November 17th, Brilliance China fell 1.43% to close at 6.9 yuan, and Xinchen Power fell 4.48% to 0.32 yuan.
100 billion debt dilemma
On November 13, the rumored Brilliance Group once again appeared in a new situation.
According to the National Information Network on Corporate Bankruptcy and Reorganization Cases, Brilliance Group was filed for bankruptcy and reorganization, and the applicant was Gezhi Automobile Technology Co., Ltd.
Regarding the application for bankruptcy and reorganization, the relevant person in charge of the Brilliance Group told the Beijing News reporter at that time, "We have also paid attention to it. We don't know the specific situation and have reported it."
According to the company's data, Gezhi Automobile Technology Co., Ltd. is registered in Liaoyuan City, Jilin Province. It is a technology company engaged in the design, research and development, manufacturing and sales of automotive stamping dies and a supplier of Brilliance Group.
In fact, as early as November, there was news that the Liaoning Provincial Government was considering judicial reorganization of Brilliance Group to resolve the debt problem.
At that time, sources quoted people familiar with the matter saying that the Liaoning Provincial Government had recently communicated with the financial regulatory authorities on the reorganization of Brilliance Group, but there was no clear reorganization plan, and related matters were still under discussion, so there were still variables.
Regarding the reorganization rumors, the staff of the Liaoning Provincial State-owned Assets Supervision and Administration Commission office responded to the media saying that they were not clear about the matter, and the relevant person in charge of Brilliance Group also said that they had not received relevant information.
Brilliance Group's reorganization to survive, it is difficult to hide the debt crisis that has already erupted.
The announcement of Brilliance Group showed that as of June 30 this year, the total liabilities of Brilliance Group were 132.844 billion yuan. After deducting goodwill and intangible assets, the asset-liability ratio of Brilliance Group was 71.4%, and the balance of cash and cash equivalents at the end of the period was 32.677 billion yuan.
Oriental Jincheng pointed out that as of October 22, the scale of Brilliance Group's existing bonds was 17.2 billion yuan.
A reporter from Shell Finance noted that as of October this year, Brilliance Automotive Group had issued 34 bonds and 14 remaining bonds, with a total outstanding bond balance of 16.2 billion yuan.
Among them, the scale of bonds due in 1-3 years exceeds 10 billion yuan, and the redemption period is mainly concentrated in 2022; in addition, 19 Huaqi 01 and 18 Huaqi 03 are included in the list of high implied default rates of China Securities Ratings.
Around October 23, Dagong International and Oriental Jincheng both downgraded their credit ratings of Brilliance to negative. Prior to this, Oriental Jincheng had downgraded their credit ratings on Brilliance for four consecutive times.
On this day of October 23, Brilliance Group’s 1 billion yuan bond 17 Huaqi 05 has not been redeemed at maturity. Brilliance Group issued an announcement acknowledging that current liquidity is tight and funds are facing greater difficulties.
Is bankruptcy reorganization the end of the future?
In August this year, many of the remaining bonds of Brilliance Group fell sharply and were frequently sold at low prices. The debt risks in the industry may show signs of deterioration.
Cao He, president of Quanlian Automobile Investment Management Co., Ltd. believes that Brilliance Group's bankruptcy reorganization is a high probability event.
From the perspective of Brilliance Group's own finances, it is difficult to repay debts, and it is likely that Liaoning Trading will be the main body for restructuring.
In September, Qi Kai, vice president of Brilliance Group, mentioned the introduction of strategic investment transformation to reporters of the Beijing News at the media communication meeting of Brilliance Group, and said that there is no necessary requirement for controlling shares when making passenger cars and commercial vehicles.
It is reported that this year, Brilliance Group has also carried out internal reforms, including management structure adjustment, focusing on vehicle and parts business; focusing on entry-level electric vehicles, upgrading the Chinese brand and other strategies.
However, the industry generally believes that the main problem of Brilliance Group is that its own brands are weak and its profit is heavily dependent on BMW Brilliance. However, the equity adjustment period of BMW Brilliance is getting closer and it is unrealistic to rely on BMW Brilliance to pull Brilliance out of the quagmire.
At present, Brilliance Group has three independent brands, Brilliance Zhonghua, Huasong, and Jinbei; among them, the passenger car market information joint meeting data shows that the cumulative sales of Brilliance Zhonghua in the first half of this year were 3,186 vehicles, with an average monthly sales of more than 500 vehicles.
In 2019, Brilliance Group achieved sales of 721,800 passenger vehicles and 78,600 commercial vehicles; but it is worth noting that the sales of BMW Brilliance 545,500 accounted for 75% of the total sales of Brilliance Group's passenger vehicles.
Oriental Jincheng analyzed in the research report that “under the influence of the epidemic, the sales volume and business income of Brilliance Group's own brands continue to decline, and the profitability is still relatively weak.”
The weakness of its own brands in recent years has forced the Brilliance Group to become overly dependent on the joint venture company BMW Brilliance in a single sector.
BMW Brilliance can be called the "profit cow" of Brilliance Group.
Public data shows that from 2011 to 2018, BMW Brilliance contributed an average of RMB 1.7 billion to RMB 5.5 billion in profits to Brilliance Group each year, and the proportion of Brilliance Group’s net profit also increased year by year, with an average of 94.9% to 119.6. %, basically above 90%.
In 2019, Brilliance Group’s annual revenue was 4.027 billion yuan, and its pre-tax profit was 6.292 billion yuan, of which BMW Brilliance is the main source of profit for Brilliance Group.
In 2019, the net profit of BMW Brilliance was 7.626 billion yuan. It can be seen that if the net profit of BMW Brilliance is excluded, the profit before tax of Brilliance Group is in a state of loss, with a loss of more than 1 billion yuan.
In addition, in the field of new energy vehicles, Brilliance Group has no models yet.
Qi Kai, vice president of Brilliance Group, once publicly stated that “Brilliance Xinri, a joint venture of Brilliance Group, is expected to put into production the first new energy vehicle by the end of this year.”
For Brilliance Group, it is more important to enhance the competitiveness of its own brands and accelerate its pace in the field of new energy vehicles.
The knock-out race in the automobile market has already begun. Since the beginning of this year, disadvantaged brands such as Zotye Automobile and Lifan Automobile have been reorganized one after another. Brilliance Group, which is on the edge of the mainstream market, urgently needs to accelerate.
Beijing News reporter Wang Linlin