China Harmony Auto Holding (HKG:3836) will sell a 45% stake in its subsidiary iCar Group to EGL, an entity owned by Chairman Feng Jiansheng, for 330 million yuan, according to a Friday Hong Kong bourse filing.
The consideration will be fully offset against existing loans owed by the company to EGL.
As part of the deal, the operator of car dealerships will undertake a capital restructuring that includes converting parts of shareholder loans into preferred loans and convertible notes.
Following the restructuring, EGL will own 45% of the unit, with Harmony Auto retaining 55%.
The iCar Group holds Harmony Auto's overseas electric vehicle business. The company said the sale reflects a strategic decision to reduce its equity exposure to the unit amid high capital requirements and global competitive pressures.
While reaffirming confidence in the long-term potential of Chinese NEV brands abroad, Harmony Auto said the disposal allows it to manage financial risk more prudently as the business remains in a growth phase and may take time to reach profitability.
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