Liaoning government makes its play for Brilliance China
Trade in the shares of Brilliance China Automotive Holdings was suspended yesterday morning as the Liaoning provincial government sought to win control of the company, a source close to the deal said.
The Liaoning government - which has been in dispute with Brilliance China's founder Yang Rong over the control of the company for more than six months - plans to buy a 39.45 per cent stake in the maker of cars and minivans from the Chinese Financial Education Development Foundation, the existing controlling shareholder, the source said.
The company said in an announcement that it had requested the suspension, 'pending the possible release of an announcement concerning price-sensitive information'.
Shares in the company were unchanged at HK$1.45 before trade was suspended at 10 am yesterday.
Last month, the company said the provincial government, through an unnamed 'wholly owned subsidiary', had approached the foundation for the possible acquisition of all or part of its stake.
Mr Rong, who fled to the United States in late May in fear of his 'personal safety', later filed a lawsuit with a Beijing court against the foundation in a bid to get back what he said was his personal investment in Brilliance China and other related firms.
Mr Yang was once ranked as China's third-richest man, behind Yang Bin, who was recently arrested for suspected economic crimes.
Last week, the Beijing court transferred the case to the Liaoning provincial public security bureau, dashing Mr Yang's hope for a trial independent of the influence of authorities in Liaoning.
On Tuesday, a mainland newspaper reported that a new company called Hua Chen Automotive Holdings had been established for the purpose of taking control of Brilliance China.
Some analysts said the takeover would be a good opportunity for the company to revamp its corporate governance and transparency, but others said it remained to be seen whether government-backed management could perform any better than Mr Yang.