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autoNovember 17, 2020

Exclusive: BMW deal to hike stake in China JV unaffected by Brilliance parent's debt issues

BEIJING/HONG KONG (Reuters) - German automaker BMW BMWG.DE said on Tuesday that there was no indication that its deal to hike its stake in its main China joint venture with Brilliance China Automotive 114.HK would be impacted by the debt issues of the latter's parent.

BMW said in 2018 that it would pay 3.6 billion euros ($4.2 billion) in 2022 for a further 25% stake in the joint venture with China joint venture partner Brilliance China Automotive Holdings Ltd, adding to its existing 50% holding and giving it control of BMW Brilliance Automotive (BBA).

However, investors have raised doubts over whether the deal will proceed as creditors of Brilliance’s parent, Huachen Automotive Group, have applied to a court asking for a restructuring of the company.

“For the BMW Group, there is no indication that the validity of these contracts would be limited by the current situation,” a BMW representative told Reuters via an emailed statement on Tuesday.

“The BMW Group and the operating business of the joint venture BMW Brilliance Automotive Ltd. (BBA) are not directly affected by the payment difficulties of the Chinese Brilliance Group (official name: Huachen Automotive Group Holdings Company Ltd.).”