On October 1, SAIC Group released the “Announcement on Subsidiary Power New Science and Technology’s Joint Investment in the Restructuring of SAIC Hongyan and Related Party Transactions.” The announcement reveals that the subsidiary Power New Science and Technology plans to form a consortium with SAIC’s parent company and other relevant parties to invest in the restructuring of SAIC Hongyan, with an investment amount of 666 million yuan. After the restructuring, the consortium is expected to hold a 14.66% stake in SAIC Hongyan.
Additionally, Power New Science and Technology also announced that it plans to join forces with SAIC’s parent company, the Chongqing Liangjiang New Area High-Quality Development Industry Private Equity Investment Fund Partnership (Limited Partnership), and Chongqing Development Asset Management Co., Ltd. to participate in the restructuring of SAIC Hongyan. The company expects to hold a 14.66% stake in the restructured SAIC Hongyan, with an investment of approximately 666 million yuan.
According to the announcement, this transaction constitutes a related-party transaction, with the transaction amount accounting for about 0.23% of the company’s latest audited net assets attributable to the shareholders of the listed company. If the restructuring plan for SAIC Hongyan is approved by the court, Power New Science and Technology’s stake in the restructured SAIC Hongyan will be less than 20%, and SAIC Hongyan will no longer be included in the consolidated scope, which will have a positive impact on the company’s financial indicators for the year when it is excluded. Preliminary calculations suggest that the profit generated from the exclusion could account for more than 50% of the audited net profit attributable to the shareholders of the listed company for the year 2024.
The bankruptcy restructuring of SAIC Hongyan began in July this year. On July 1, Power New Science and Technology announced that the creditor of its wholly-owned subsidiary SAIC Hongyan, Chongqing Anji Hongyan Logistics Co., Ltd., had applied to the Chongqing Fifth Intermediate People’s Court for bankruptcy restructuring of SAIC Hongyan, citing its inability to repay overdue debts and serious insolvency, but still having restructuring value and feasibility. The court has accepted the bankruptcy restructuring application and appointed Taihe Tai (Chongqing) Law Firm and Xin Yong Zhonghe Accounting Firm (Special General Partnership) Chongqing Branch as the administrators for SAIC Hongyan.
SAIC Hongyan is an important part of SAIC Group’s commercial vehicle market. SAIC Hongyan traces its history back to 1965 when it was originally known as Sichuan Automotive Manufacturing Factory, established under China’s strategic “third-line construction.” Currently, SAIC Hongyan owns several heavy truck brands, including Hongyan Jieshi, Hongyan Jiebao, Hongyan Jieka, Hongyan Jingang, and Hongyan Jihu, covering various models such as tractors, dump trucks, cargo trucks, and special vehicles.
In recent years, SAIC Hongyan’s development has taken a sharp downturn. According to Power New Science and Technology’s previous financial reports, SAIC Hongyan incurred substantial losses from 2022 to 2024, with losses of approximately 1.7 billion yuan, 2.4 billion yuan, and 2.19 billion yuan, respectively. In the first half of this year, the loss amounted to 380 million yuan. As of the first half of this year, SAIC Hongyan’s total assets were 2.32 billion yuan, with total liabilities amounting to 5.61 billion yuan.
According to the announcement, SAIC Hongyan is currently in the restructuring phase. Before the restructuring, SAIC Hongyan was a wholly-owned subsidiary of Power New Science and Technology. Based on the proposed restructuring investment agreement to be signed by the parties, due to the fact that SAIC Hongyan is insolvent during restructuring, its original shareholder (Power New Science and Technology) will see its equity adjusted to zero. The consortium formed by Power New Science and Technology and SAIC’s parent company plans to invest a total of 3 billion yuan in this restructuring. If no other investors participate, the consortium is expected to hold 66% of the restructured SAIC Hongyan. The announcement also emphasized that according to the “SAIC Hongyan Restructuring Investor Recruitment Announcement,” SAIC Hongyan’s administrator will select the restructuring investors in an open, fair, and just manner. Currently, Power New Science and Technology and the relevant parties have not yet signed the restructuring investment agreement for SAIC Hongyan, and the restructuring plan draft still needs to be reviewed by the creditors’ meeting and approved by the court. The final impact of the restructuring on the company will depend on the future restructuring plan and court ruling.
