Shanghai (ZXZC)- FAW Group, the controlling shareholders of FAW Xiali, has been discussing the equity transferring plan since the stock trade suspension in September. With the approval from SASAC (State-owned Assets Supervision and Administration Commission of State Council), FAW Group makes clear the transferring plan and trading threshold today that it plans to transfer 394.5m shares of FAW Xiali to receiving party in way of public solicitation, which accounts for 24.73% of the total shares. The controlling shareholder for FAW Xiali will change after the transfer is completed. 

Financial data shows that FAW Xiali has a total asset of RMB 4.71b and net asset of RMB 1.73b till the end of 2016. It has operating revenue of RMB 2.03b and a net profit of RMB 163m in 2016. Influenced by the decreasing vehicle sales, FAW Xiali faces deficit of RMB 1.12b in the previous three quarters this year and burdens great pressure in its strategic transformation. Therefore, FAW Group sets a relatively high threshold for the receiving party, with the following qualifications:

Firstly, the receiving party should have clear operating development strategy and related supporting commercial resources to provide practical plans for FAW Xiali’s strategic transformation. Besides, the receiving party should promise to inject assets to FAW Xiali within certain periods.

Secondly, the receiving party or its actual controller should have a history of over three years and achieve profits for the past two consecutive years.

FAW Group also emphasizes that the receiving party should maintain the staff stability and raise welfare benefits for employees after it obtains the controlling right. Receiving party should also consent that FAW Xiali will transfer its 15% shares of Tianjin FAW Toyota to FAW Group.

The public solicitation period spans from November 7th to November 20th. But FAW Xiali also points out that there is risk that the share transfer may fail.