[YesAuto News] In order to improve the cash flow situation, FAW Xiali made a major decision: liquidation of all shares in the “money cow” FAW Toyota. On November 28, FAW Xiali (000927) announced that it intends to transfer its 15% stake in Tianjin FAW Toyota to the company's controlling shareholder FAW for a price of about 2.923 billion yuan. After the completion of the equity transfer, FAW Xiali will no longer hold FAW Toyota shares, and FAW’s shareholding in FAW Toyota will increase to 50%. This is just over 4 months after FAW Xiali sold its subsidiary FAW Huali Automobile Co., Ltd. for 1 yuan.
FAW Xiali explained that the necessity and rationality of this transaction lies in the fact that through this equity transfer, the listed company can obtain large-scale working capital, improve the company’s cash flow, realize the rational allocation of corporate resources, and ensure the smooth operation of the company, and Lay a good foundation for future business reform and development and product adjustments, and protect the interests of small and medium shareholders.
Another analyst said that since the net profit of FAW Xiali attributable to shareholders of listed companies in the first three quarters of 2018 was about 1.03 billion yuan, in order to prevent the risk of delisting, FAW Xiali was eager to realize the cash to save performance.
According to data, FAW Toyota contributed 484 million yuan, 369 million yuan, and 184 million yuan to FAW Xiali in 2015, 2016 and 2017 respectively. However, in order to quickly improve its own funding situation, this is the second time that FAW Xiali has sold FAW. Toyota shares. Tianjin FAW Toyota was established by FAW Xiali, FAW Group, Toyota Motor Corporation and Toyota Motor (China) Investment Co., Ltd. with 30%, 20%, 40%, and 10% shareholding ratios respectively. In August 2016, FAW Xiali transferred a 15% stake in FAW Toyota to FAW at a price of 2.561 billion yuan. After the transfer of 15% of the equity this time, FAW Xiali will no longer hold FAW Toyota shares.
According to the “Equity Transfer Agreement” signed by FAW Xiali and FAW, after the signing of this agreement, FAW shall make an advance payment of RMB 200 million to FAW Xiali within 3 working days. Within 10 working days after the agreement comes into effect, FAW must pay FAW Xiali the entire remaining transfer price.