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Glass maker to sell Goldman stake

(China Daily)
Updated: 2006-11-21 08:26

US investment bank Goldman Sachs has offered to buy a 9.98 per cent stake in China's biggest auto glass maker, Fuyao Glass Industry Group Co Ltd, for 890 million yuan (US$113 million).

Fuyao said yesterday it would issue 111.28 million new shares at 8 yuan (US$1) each in a private placement to an investment arm of Goldman Sachs.

Fuyao said it would use about 80 per cent of the proceeds to settle loans.

The deal is subject to approval by the Ministry of Commerce and the China Securities Regulatory Commission.

The transaction is seen by analysts as a vote of confidence by the US investment bank in the future of China's auto market. "It is clear that Goldman is placing its bet on China's fast growing car market," said Zhang Xin, an analyst with Guotai Jun'an Securities.

"The deal will help Fuyao reduce its financial expenses," Zhang said. "As the leader in China's auto glass market, the company is import in the international auto glass market."

By the third quarter of this year, Fuyao's total debt was 4.6 billion yuan (US$582 million). It said the deal is expected to reduce its bank loan by 710 million yuan (US$89.87 million). By the third quarter, the company's assets to debt ratio was 63.59 per cent, much higher than the industry average.

The company's third-quarter profit jumped 46 per cent to 162 million yuan (US$20.51 million) from a year earlier and sales increased 21 per cent to 1 billion yuan (US$126.58 million). It had 392 million yuan (US$49.62 million) of net income last year.

Shares of Fuyao yesterday rose 5.81 per cent to 10.57 yuan (US$1.34) on the Shanghai Stock Exchange.

As China's largest auto glass company, Fuyao will produce 11 million pieces of auto glass by the end of this year, its vice-president Bai Yaohua told China Daily at an earlier date.

Its production volume will reach 13 million pieces by the end of next year after the establishment of the Beijing and Guangzhou branches, he said.