China court accepts application to restructure parent of BMW's local partner

BEIJING (Reuters) – A Chinese court has accepted an application from a creditor of Huachen Automotive Group Holding Co Ltd seeking the restructuring of the parent of BMW AG’s BMWG.DE joint venture partner Brilliance China Automotive Holdings Ltd 1114.HK.

The Liaoning Shenyang Municipal Intermediate People’s Court accepted the application from GZ Tooling Group Co Ltd, an auto mould supplier, to restructure Huachen after the Liaoning government-owned company failed to pay mould costs and interest worth 10.2 million yuan ($1.55 million), showed a court filing published on Friday.

The restructuring will not involve Huachen’s listed unit or joint ventures with BMW and Renault SA RENA.PA, state news agency Xinhua reported citing an unidentified Huachen executive.

The venture with BMW will remain a steady source of profit for the group, which will make its best effort to recover creditors’ losses after restructuring, Xinhua said.

A Huachen media representative declined to comment beyond directing Reuters to the Xinhua article.

At June-end, Huachen had 46 billion yuan in assets and debt of 52.4 billion yuan, the court filing said, citing data from the Shanghai Stock Exchange.

Huachen defaulted on a 1 billion yuan bond last month, joining a growing number of delinquent state firms in a development that has hit investor confidence and roiled China’s credit bond market.

The latest clutch of defaults, which Goldman Sachs analysts noted is bigger and includes more state-owned enterprises than last year, highlights the close attention needed to avoid being caught in the credit clean-up.

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