[ET Net News Agency, 10 November 2017] Moody's Investors Service said that Geely
Automobile Holdings Limited's (Ba1 stable) proposed acquisition of three auto part
factories in Baoji, Yili and Ningbo from parent Zhejiang Geely Holding Group Company
Limited will -- once it completes -- have no immediate impact on its Ba1 corporate family
and senior unsecured bond ratings.
The ratings outlook remains stable.
The proposed acquisition has no immediate rating impact because Geely is expected to
fund the transaction with cash-on-hand and the company's credit metrics after the
acquisition will continue to support its Ba1 ratings.
On 7 November 2017, Geely announced that it had agreed to acquire an engine factory in
Baoji -- in the province of Shaanxi -- for RMB345 million, an engine factory in Yili, and
a transmission factory in Ningbo -- both in Zhejiang province -- for RMB495 million and
RMB993 million, respectively.
The considerations are based on the net asset values and value premiums over the
carrying value of land and buildings at 30 September 2017, as well as the expected capital
contributions to be made by Zhejiang Geely to the three auto part factories in November
2017.
Geely will also repay a maximum of about RMB3.1 billion of a shareholders' loan borrowed
by the three factories from Zhejiang Geely within 12 months of the completion of the
acquisition.
The Baoji and Yili factories have designed production capacities of 360,000 and 400,000
units of vehicle engines per annum and are expected to commence production by the end of
November and December 2017 respectively. The Ningbo factory has a designed production
capacity of 600,000 units of transmissions per annum and began production in October 2017.
(KL)