Shanghai, July 23 (Gasgoo.com) Changhe Auto's shares that was suspended on June 8 resumed its trading in the Shanghai stock market on July 18. The loss-making carmaker will transform itself into an aerospace company by acquiring assets of two aerospace companies and selling its own auto-making assets to a unit of China Aviation, said auto.sina.com.cn today
Changhe Auto has entered into an agreement with a unit of China Aviation Industry Group Corp for an asset restructuring exercise. Under the deal, Changhe Auto will sell all its assets and liabilities to the China Aviation unit and issue up to 90 million new shares to the latter.
In return, the China Aviation unit will transfer to Changhe Auto its 100% equity interests in Shanghai Aviation Electric Co and Lanzhou Wanli Aviation Electrical Engineering Co. The combined value of the two subsidiaries of China Aviation is estimated at up to 920 million yuan ($135 million).
China Aviation Industry Group Corp is a state-controlled holding company by merging the country's two state-run aircraft makers, AVIC I and AVIC II. According to the restructuring plan, Changhe Auto of AVIC II will shift to the aerospace industry, perhaps making aircraft parts such as aircraft electromechanical components.
It remains to be seen whether Changhe Auto's sister company Hafei Auto will take over Change's automaking assets to boost the automaking business of the new China Aviation. Now that it’s no longer an automaker, Changhe is expected to end its sibling rivalry with Hafei Auto and joint venture with Suzuki Motor.