Beijing (Gasgoo) – Yueda Investment, one of the two remaining shareholders of Dongfeng Yueda Kia (DYK), announced on March 1 that the company would not participate in DYK’s capital increase.
Photo: Dongfeng Yueda Kia
According to the announcement, DYK intends to raise $ 600 million through a capital increase. Yueda Investment, its shareholder of 25% of the shares, decided to withdraw from the stock due to rather fierce competition in China’s automotive industry and other investment needs in the project. The funds required by DYK from Yueda Investment to complete the capital increase will be contributed by Yueda Automobile Group.
Yueda Automobile Group is another joint venture led by Yueda Group with a 70% stake, while Yancheng State-Owned Asset Group owns the remaining 30%.
According to Yueda Investment, after the capital increase, the company’s stake in DYK will be diluted from the current 25% to 4.2%. This action also supports the decision of Yueda Investment to no longer consider the automotive industry as the core business of the group, and it will actively seek other projects to increase profitability.
In addition, the record shows that Dongfeng Yueda Kia reported a total loss of 4.75 billion yuan in 2020. In the first nine months of 2021, the company’s net losses amounted to 1.715 billion yuan.
It should be noted that in December 2021, Dongfeng Motor Corporation officially withdrew from the joint venture.