omniture

Brilliance China Automotive Holdings Limited

Brilliance China Automotive Holdings Limited
2006-12-18 13:22 1641

HONG KONG, Dec. 15 /Xinhua-PRNewswire/ --

(1) REVISION OF CAPS FOR RELEVANT CONTINUING CONNECTED TRANSACTIONS,

(2) ADDITIONAL CONTINUING CONNECTED TRANSACTIONS,

(3) CONNECTED AND MAJOR TRANSACTION - PROVISION OF FINANCIAL ASSISTANCE

TO/BY CONNECTED PERSONS,

(4) INCREASE IN AUTHORISED SHARE CAPITAL AND

(5) AMENDMENT TO BYE-LAWS

Revision of Caps for the Relevant Continuing Connected Transactions

Reference is made to the Continuing Connected Transactions and the Caps

which were approved by the Shareholders at the 2006 SGM. The Directors

expected the actual monetary value of the following transactions carried out

and to be carried out under the Continuing Connected Transactions for the

financial year ending 31 December 2006 and/or one or both of the two

financial years ending 31 December 2008 will exceed the relevant Caps:

-- purchases of materials and automotive components by each of Shenyang

Automotive, Xing Yuan Dong, Dongxing, Ningbo Yuming and ChenFa from

JinBei and its subsidiaries and associates (other than Shenyang

Automotive);

-- purchases of materials and automotive components by each of ChenFa,

Dongxing and Shenyang Brilliance Power from Shenyang Automotive;

-- sale of automobiles and automotive components by Shenyang Automotive

to JinBei and its subsidiaries and associates (other than Shenyang

Automotive); and

-- sale of materials and automotive components by each of Dongxing, Xing

Yuan Dong, ChenFa and Shenyang Brilliance Power to Shenyang

Automotive.

Particulars of the above Relevant Continuing Connected Transactions,

including the expected monetary value of the transactions carried out and to

be carried out in the financial year ending 31 December 2006 and the Revised

Caps for one or both of the two financial years ending 31 December 2008 are

set out in the paragraph headed "The Revised Caps" in this announcement.

Additional Continuing Connected Transactions

For the two financial years ending 31 December 2008, members of the

Group will carry out the following Additional Continuing Connected

Transactions:

-- purchases of materials and automotive components by Xing Yuan Dong and

Shenyang Jindong from Shenyang Automotive;

-- sale of materials and automotive components by Shenyang Jindong to

JinBei and its subsidiaries and associates (other than Shenyang

Automotive); and

-- sale of materials and automotive components by Ningbo Ruixing,

Shanghai Hidea, Mianyang Ruian and Shenyang Jindong to Shenyang

Automotive.

Particulars of the Additional Continuing Connected Transactions and the

New Caps are set out in the sub-paragraphs headed "The Additional Continuing

Connected Transactions" and "The New Caps" in this announcement.

Financial assistance to/by connected persons

Shenyang Automotive and Xing Yuan Dong will provide cross guarantees to

each other's banking facilities in the amount of RMB1.5 billion and Xing

Yuan Dong and JinBei will provide cross guarantees to each other's banking

facilities in the amount of RMB500 million for a period of one year

commencing from 1 January 2007 to 31 December 2007.

Increase in authorised share capital and amendment to the Bye-Laws

The Board proposed to increase the authorised share capital of the

Company from US$50,000,000 to US$80,000,000 by the creation of an additional

3,000,000,000 Shares of US$0.01 each. The Board also proposed that subject

to the approval of the Shareholders to be obtained at the Special General

Meeting on the increase in authorised share capital of the Company from

US$50,000,000 to US$80,000,000, the bye-law 6.(A) of the Bye-Laws of the

Company be updated to reflect the increased authorised share capital of the

Company.

General

Each of JinBei, its subsidiaries and associates (other than Shenyang

Automotive) and Shenyang Automotive are connected persons of the Company

within the meaning of the Listing Rules. Accordingly, the purchases of

materials and automotive components, the sale of automobiles, materials and

automotive components and the provision of financial assistance by/to the

Group to/by JinBei, its subsidiaries and associates (other than Shenyang

Automotive) and Shenyang Automotive constitute connected transactions under

Chapter 14A of the Listing Rules. As the percentage ratios for the Financial

Assistance is more than 25% but less than 100%, the Financial Assistance

therefore also constitutes a major transaction under Chapter 14 of the

Listing Rules.

An Independent Board Committee has been established to advise the

Shareholders as to (i) the Revised Caps; (ii) the Additional Continuing

Connected Transactions and the New Caps and (iii) the Financial Assistance.

An independent financial adviser will be appointed to advise the

Independent Board Committee and the Shareholders in respect of the Revised

Caps, the Additional Continuing Connected Transactions and the New Caps and

the Financial Assistance. Given that no connected person which is a party to

the Relevant Continuing Connected Transactions, the Additional Continuing

Connected Transactions and Financial Assistance is a Shareholder, all

Shareholders are eligible to vote on the ordinary resolutions to be proposed

at the Special General Meeting in respect of the Revised Caps, the

Additional Continuing Connected Transactions and the New Caps and the

Financial Assistance.

A circular containing, amongst other things, details of the Relevant

Continuing Connected Transactions, the Revised Caps, the Additional

Continuing Connected Transactions, the New Caps, the Financial Assistance

and the proposed increase in authorised share capital and amendment to the

Bye-Laws, letters from the Independent Board Committee and from the

Independent Financial Adviser and a notice to Shareholders convening the

Special General Meeting to approve (i) the Revised Caps; (ii) the Additional

Continuing Connected Transactions and the New Caps; (iii) the Financial

Assistance; (iv) the proposed increase in authorised share capital; and (v)

the proposed amendment to the Bye-Laws, will be dispatched to Shareholders

as soon as practicable.

I. THE CONTINUING CONNECTED TRANSACTIONS

1. The Continuing Connected Transactions

Reference is made to the Announcement and the circular issued by the

Company dated 23 January 2006 in relation to, among others, the Continuing

Connected Transactions and the Caps.

The Group is engaged in the manufacture and sale of minibuses and

automotive components and sedans. During the course of its business, the

Group acquires materials and automotive components from certain connected

persons and sells automobiles, materials and automotive components to

certain connected persons, on an ongoing basis.

At the 2006 SGM, the Shareholders approved the Continuing Connected

Transactions and the Caps.

The Directors expected the actual monetary value of the Relevant

Continuing Connected Transactions for the financial year ending 31 December

2006 and/or one or both of the two financial years ending 31 December 2008

will exceed the relevant Caps. As the Relevant Continuing Connected

Transactions will be carried out under respective framework agreements

entered into on 16 December 2005, no new agreements will be entered into for

the Relevant Continuing Connected Transactions as a result of the Revised

Caps.

2. The Relevant Continuing Connected Transactions

The Relevant Continuing Connected Transactions have been and will be

carried out for the three financial years ending 31 December 2008 pursuant

to the principal terms of the framework agreements dated 16 December 2005.

Particulars of the framework agreements for the Relevant Continuing

Connected Transactions are set out in the sub-paragraphs A1 to A5, B1 to B3

and C1, C4 to C7 in the paragraph headed "The Continuing Connected

Transactions" in the Announcement. Pursuant to the framework agreements, the

Relevant Continuing Connected Transactions have been and will be carried out

on terms which are no less favourable than the terms which can be obtained

by the relevant members of the Group from independent third parties for

products of comparable quality and quantity.

The following are the Relevant Continuing Connected Transactions and the

actual value of the transactions entered into between the parties for the

six months ended 30 June 2006:

Actual amounts

in RMB'000

for the six

Relevant Continuing Connected Transaction months ended 30

June 2006

(a) Purchases of materials and automotive components

by members of the Group (including Shenyang

Automotive) from JinBei and its subsidiaries and

associates (other than Shenyang Automotive)

i Purchases of materials and automotive components 248,215

by Shenyang Automotive from JinBei and its

subsidiaries and associates (other than Shenyang

Automotive)

ii Purchases of materials and automotive components 76,814

by Xing Yuan Dong from JinBei and its subsidiaries

and associates (other than Shenyang Automotive)

iii Purchases of materials and automotive components 9,554

by Dongxing from JinBei and its subsidiaries and

associates (other than Shenyang Automotive)

iv Purchases of materials and automotive components 3,126

by Ningbo Yuming from JinBei and its subsidiaries

and associates (other than Shenyang Automotive)

v Purchases of materials and automotive components by 1,216

ChenFa from JinBei and its subsidiaries and

associates (other than Shenyang Automotive)

(b) Purchases of materials and automotive

components by members of the Group (other than

Shenyang Automotive) from Shenyang Automotive

i Purchases of materials and automotive components 39,345

by ChenFa from Shenyang Automotive

ii Purchases of materials and automotive components 20,325

by Dongxing from Shenyang Automotive

iii Purchases of materials and automotive components Nil

by Shenyang Brilliance Power from Shenyang

Automotive

(c) Sale of automobiles, materials and automotive

components by members of the Group to connected

persons

i Sale of automobiles and automotive components by 39,724

Shenyang Automotive to JinBei and its subsidiaries

and associates (other than Shenyang Automotive)

ii Sale of materials and automotive components by 111,924

Dongxing to Shenyang Automotive

iii Sale of materials and automotive components by 1,027,100

Xing Yuan Dong to Shenyang Automotive

iv Sale of materials and automotive components by 372,497

ChenFa to Shenyang Automotive

v Sale of materials and automotive components by Nil

Shenyang Brilliance Power to Shenyang Automotive

As at 30 June 2006, the monetary value of the transactions occurred

between the parties in respect of the following Relevant Continuing

Connected transactions have exceeded the Caps for the financial year ending

31 December 2006 as approved by the Shareholders at the 2006 SGM:

Approved Actual amounts

amounts in in RMB'000

Relevant Continuing RMB'000 for the six

Connected Transactions for the year months ended 30

ending 31 June 2006

December 2006

(a)(i) Purchases of materials 230,000 248,215

and automotive components

by Shenyang Automotive

from JinBei and its

subsidiaries and

associates (other than

Shenyang Automotive)

(a)(iii) Purchases of materials 4,000 9,554

and automotive components

by Dongxing from JinBei

and its subsidiaries and

associates (other than

Shenyang Automotive)

(a)(v) Purchases of materials 500 1,216

and automotive components

by ChenFa from JinBei and

its subsidiaries and

associates (other than

Shenyang Automotive)

(b)(i) Purchases of materials

and automotive components

by ChenFa from Shenyang

Automotive 25,000 39,345

At the time of the preparation of the 2006 Interim Results in the third

quarter of 2006, it was brought to the attention of the Company that the

monetary value of the transactions occurred between the parties in respect

of Relevant Continuing Connected Transactions (a)(i), (a)(iii), (a)(v) and

(b)(i) set out in the above table may exceed the Caps for the financial year

ending 31 December 2006 as approved by the Shareholders at the 2006 SGM.

Action was immediately taken after the finalization of 2006 Interim Results

in late September 2006 to ascertain whether the Caps for the Continuing

Connected Transactions for the financial year ending 31 December 2006 will

be exceeded and to ensure compliance of the Caps, as well as to re-evaluate

the sufficiency of the Caps for the two financial years ending 31 December

2008 in light of the actual monetary value of the transactions for the six

months ended 30 June 2006 and the performance of the Company in 2006. Due to

the volume of the transactions and the number of parties involved, a lengthy

period was required to complete the review. Upon completion of the lengthy

review process, it was then noted that for the reasons set out in the sub-

paragraph headed "Basis of the Revised Caps and the New Caps" below,

particularly the unforeseen significant increase in the demand for the new

model of the sedans of the Group since the second quarter of 2006, the Caps

for the Relevant Continuing Connected Transactions other than Relevant

Continuing Connected Transactions (a)(ii), (b)(iii), (c)(iii) and (c)(v)

have been or will be exceeded for the financial year ending 31 December

2006. The Company therefore took immediate action to remedy the situation.

Estimated amounts of the transactions in respect of the Relevant

Continuing Connected Transactions for the year ending 31 December 2006 set

out in the sub-paragraph headed "The Revised Caps" below are for information

purposes and Shareholders' approval will not be sought for the estimated

amounts for the year ending 31 December 2006. Shareholders' approval will be

sought for the Revised Caps for the two financial years ending 31 December

2008 set out in the sub-paragraph headed "The Revised Caps" below at the

Special General Meeting.

3. The Additional Continuing Connected Transactions

The following are the principal terms of the framework agreements dated

15 December 2006 pursuant to which the Additional Continuing Connected

Transactions will be carried out for the two financial years ending

31 December 2008.

(a) Purchases of materials and automotive components by members of the

Group (other than Shenyang Automotive) from Shenyang Automotive

(i) Purchases of materials and automotive components by Xing Yuan Dong

from Shenyang Automotive

Vendor : Shenyang Automotive, a 51% owned subsidiary of the

Company

Purchaser : Xing Yuan Dong, a wholly-owned subsidiary of the

Company

Agreement : On 15 December 2006, Shenyang Automotive and Xing

Yuan Dong entered into a framework agreement in

relation to the purchases of materials and

automotive components by Xing Yuan Dong from

Shenyang Automotive

Pricing policy : The materials and automotive components are to be

provided to Xing Yuan Dong by Shenyang Automotive on

terms which are no less favourable than the terms

which can be obtained by Xing Yuan Dong from

independent third parties for purchase of materials

and automotive components of comparable quality and

quantity. The price will be agreed upon between the

parties for each transaction by reference to the

aforementioned pricing policy through arm's length

negotiations

(ii) Purchases of materials and automotive components by Shenyang

Jindong from Shenyang Automotive

Vendor : Shenyang Automotive, a 51% owned subsidiary of the

Company

Purchaser : Shenyang Jindong, a 75.50% owned subsidiary of the

Company

Agreement : On 15 December 2006, Shenyang Automotive and

Shenyang Jindong entered into a framework agreement

in relation to the purchases of materials and

automotive components by Shenyang Jindong from

Shenyang Automotive

Pricing policy : The materials and automotive components are to be

provided to Shenyang Jindong by Shenyang Automotive

on terms which are no less favourable than the terms

which can be obtained by Shenyang Jindong from

independent third parties for purchase of materials

and automotive components of comparable quality and

quantity. The price will be agreed upon between the

parties for each transaction by reference to the

aforementioned pricing policy through arm's length

negotiations

(b) Sale of materials and automotive components by members of the Group

to connected persons

(i) Sale of materials and automotive components by Shenyang Jindong to

JinBei and its subsidiaries and associates (other than Shenyang

Automotive)

Vendor : Shenyang Jindong, a 75.50% owned subsidiary of the

Company

Purchaser : JinBei and its subsidiaries and associates (other

than Shenyang Automotive), including but not limited

to Tieling Brilliance Rubber Products Company

Limited

Agreement: : On 15 December 2006, Shenyang Jindong and JinBei

entered into a framework agreement in relation to

the sale of materials and automotive components by

Shenyang Jindong to JinBei and its subsidiaries and

associates (other than Shenyang Automotive)

Pricing policy : The materials and automotive components are to be

provided to JinBei and its subsidiaries and

associates (other than Shenyang Automotive) by

Shenyang Jindong on terms which are no less

favourable than the terms which can be obtained by

Shenyang Jindong from independent third parties for

sale of materials and automotive components of

comparable quality and quantity. The price will be

agreed upon between the parties for each transaction

by reference to the aforementioned pricing policy

through arm's length negotiations

(ii) Sale of materials and automotive components by Ningbo Ruixing to

Shenyang Automotive

Vendor : Ningbo Ruixing, a wholly-owned subsidiary of the

Company

Purchaser : Shenyang Automotive, a 51% owned subsidiary of the

Company

Agreement: : On 15 December 2006, Ningbo Ruixing and Shenyang

Automotive entered into a framework agreement in

relation to the sale of materials and automotive

components by Ningbo Ruixing to Shenyang Automotive

Pricing policy : The materials and automotive components are to be

provided to Shenyang Automotive by Ningbo Ruixing on

terms which are no less favourable than the terms

which can be obtained by Ningbo Ruixing from

independent third parties for sale of materials and

automotive components of comparable quality and

quantity. The price will be agreed upon between the

parties for each transaction by reference to the

aforementioned pricing policy through arm's length

negotiations

(iii) Sale of materials and automotive components by Shanghai Hidea to

Shenyang Automotive

Vendor : Shanghai Hidea, a 63.25% owned subsidiary of the

Company

Purchaser : Shenyang Automotive, a 51% owned subsidiary of the

Company

Agreement: : On 15 December 2006, Shanghai Hidea and Shenyang

Automotive entered into a framework agreement in

relation to the sale of materials and automotive

components by Shanghai Hidea to Shenyang Automotive

Pricing policy : The materials and automotive components are to be

provided to Shenyang Automotive by Shanghai Hidea on

terms which are no less favourable than the terms

which can be obtained by Shanghai Hidea from

independent third parties for sale of materials and

automotive components of comparable quality and

quantity. The price will be agreed upon between the

parties for each transaction by reference to the

aforementioned pricing policy through arm's length

negotiations

(iv) Sale of materials and automotive components by Mianyang Ruian to

Shenyang Automotive

Vendor : Mianyang Ruian, a wholly-owned subsidiary of the

Company

Purchaser : Shenyang Automotive, a 51% owned subsidiary of the

Company

Agreement: : On 15 December 2006, Mianyang Ruian and Shenyang

Automotive entered into a framework agreement in

relation to the sale of materials and automotive

components by Mianyang Ruian to Shenyang Automotive

Pricing policy : The materials and automotive components are to be

provided to Shenyang Automotive by Mianyang Ruian on

terms which are no less favourable than the terms

which can be obtained by Mianyang Ruian from

independent third parties for sale of materials and

automotive components of comparable quality and

quantity. The price will be agreed upon between the

parties for each transaction by reference to the

aforementioned pricing policy through arm's length

negotiations

(v) Sale of materials and automotive components by Shenyang Jindong to

Shenyang Automotive

Vendor : Shenyang Jindong, a 75.50% owned subsidiary of the

Company

Purchaser : Shenyang Automotive, a 51% owned subsidiary of the

Company

Agreement: : On 15 December 2006, Shenyang Jindong and Shenyang

Automotive entered into a framework agreement in

relation to the sale of materials and automotive

components by Shenyang Jindong to Shenyang

Automotive

Pricing policy : The materials and automotive components are to be

provided to Shenyang Automotive by Shenyang Jindong

on terms which are no less favourable than the terms

which can be obtained by Shenyang Jindong from

independent third parties for sale of materials and

automotive components of comparable quality and

quantity. The price will be agreed upon between the

parties for each transaction by reference to the

aforementioned pricing policy through arm's length

negotiations

II. THE REVISED CAPS AND THE NEW CAPS

1. The Caps

The following table sets out the Caps for the Relevant Continuing

Connected Transactions as approved by the Shareholders at 2006 SGM:

Approved amounts in

RMB '000

for the financial years

Relevant Continuing Major type of ending 31 December

Connected Transactions products

2006 2007 2008

(a) Purchases of materials and

automotive components by

members of the Group

(including Shenyang

Automotive) from JinBei

and its subsidiaries and

associates (other than

Shenyang Automotive)

i Purchases of materials Seats, steering 230,000 280,000 350,000

and automotive systems, fuel

components by Shenyang pumps and

Automotive from JinBei driving shafts

and its subsidiaries

and associates (other

than Shenyang

Automotive)

ii Purchases of materials Axles, torsion 280,000 300,000 330,000

and automotive bars, gear

components by Xing boxes, seats

Yuan Dong from JinBei and rubber

and its subsidiaries products

associates (other than

Shenyang Automotive)

iii Purchases of materials Rubber products 4,000 4,800 7,000

and automotive

components by Dongxing

from JinBei and its

subsidiaries and

associates (other than

Shenyang Automotive)

iv Purchases of materials Inside cutting, 5,000 6,000 7,000

and automotive outside cutting

components by Ningbo and moulding

Yuming from JinBei

and its subsidiaries

and associates (other

than Shenyang

Automotive)

v Purchases of materials Driving shafts 500 600 700

and automotive

components by ChenFa

from JinBei and its

subsidiaries and

associates (other than

Shenyang Automotive)

(b) Purchases of materials

and automotive

components by members

of the Group (other than

Shenyang Automotive)

from Shenyang Automotive

i Purchases of materials Gear boxes 25,000 25,000 25,000

and automotive

components by ChenFa

from Shenyang Automotive

ii Purchases of materials Component parts 35,000 40,000 48,000

and automotive for rear axles

components by Dongxing and steel panels

from Shenyang

Automotive

iii Purchases of materials Engine assembly 104,000 260,000 420,000

and automotive and gear boxes

components by Shenyang

Brilliance Power from

Shenyang Automotive

(c) Sale of automobiles,

materials and automotive

components by members of

the Group to connected

persons

i Sale of automobiles and Press parts 85,000 100,000 120,000

automotive components

by Shenyang Automotive

to JinBei and its

subsidiaries and

associates (other than

Shenyang Automotive)

ii Sale of materials and Rear axles, 150,000 160,000 170,000

automotive components by press parts,

Dongxing to Shenyang welding parts,

Automotive paints and

special vehicle

modification

iii Sale of materials and Power trains, 2,600,000 2,800,000 3,600,000

automotive components by driving axle

Xing Yuan Dong to assembly, rear

Shenyang Automotive heaters and

water tank

assembly

iv Sale of materials and Power trains 560,000 610,000 720,000

automotive components by

ChenFa to Shenyang

Automotive

v Sale of materials and Power trains 106,000 265,000 424,000

automotive components by

Shenyang Brilliance

Power to Shenyang

Automotive

2. The Revised Caps

The following table sets out the proposed Revised Caps for the Relevant

Continuing Connected Transactions:

Revised estimated amounts

in RMB '000

Relevant Continuing Major type of for the financial years

Connected Transactions products ending 31 December

2006 2007 2008

(Note 1)

(a) Purchases of materials

and automotive

components by members

of the Group (including

Shenyang Automotive)

from JinBei and its

subsidiaries and

associates (other than

Shenyang Automotive)

i. Purchases of materials Seats, steering 740,000 1,300,000 1,900,000

and automotive systems, fuel

components by Shenyang pumps and

Automotive from JinBei driving shafts

and its subsidiaries

and associates (other

than Shenyang

Automotive)

ii Purchases of materials Axles, torsion 280,000 320,000 420,000

and automotive bars, gear (Note 2)

components by Xing Yuan boxes, seats

Dong from JinBei and and rubber

its subsidiaries and products

associates (other than

Shenyang Automotive)

iii Purchases of materials Rubber products 18,000 18,000 18,000

and automotive

components by Dongxing

from JinBei and its

subsidiaries and

associates (other than

Shenyang Automotive)

iv Purchases of materials Inside cutting, 12,000 16,000 19,000

and automotive outside cutting

components by Ningbo and moulding

Yuming from JinBei and

its subsidiaries and

associates (other than

Shenyang Automotive)

v Purchases of materials Driving shafts 3,600 5,600 6,900

and automotive

components by ChenFa

from JinBei and its

subsidiaries and

associates (other than

Shenyang Automotive)

(b) Purchases of materials

and automotive

components by members of

the Group (other than

Shenyang Automotive)

from Shenyang Automotive

i Purchases of materials Gear boxes 83,000 83,000 83,000

and automotive

components by ChenFa

from Shenyang

Automotive

ii Purchases of materials Component parts 48,000 60,000 87,000

and automotive for rear axles

components by Dongxing and steel panels

from Shenyang

Automotive

iii Purchases of materials Engine assembly 104,000 880,000 1,130,000

and automotive and gear boxes (Note 2)

components by Shenyang

Brilliance Power from

Shenyang Automotive

(c) Sale of automobiles,

materials and

automotive components

by members of the Group

to connected persons

i Sale of automobiles and Press parts 162,000 280,000 387,000

automotive components

by Shenyang Automotive

to JinBei and its

subsidiaries and

associates (other than

Shenyang Automotive)

ii Sale of materials and Rear axles, 252,000 410,000 560,000

automotive components press parts,

by Dongxing to Shenyang welding parts,

Automotive paints and

special vehicle

modification

iii Sale of materials and Power trains, 2,600,000 3,800,000 5,200,000

automotive components by driving axle (Note2)

Xing Yuan Dong to assembly, rear

Shenyang Automotive heaters and

water tank

assembly

iv Sale of materials and Power trains 1,200,000 1,900,000 2,400,000

automotive components

by ChenFa to Shenyang

Automotive

v Sale of materials and Power trains 106,000 900,000 1,150,000

automotive components

by Shenyang Brilliance

Power to Shenyang Automotive

Notes:

1. The amounts for the financial year ending 31 December 2006 are

set out in the above table for information purposes.

2. The caps for the Relevant Continuing Connected Transactions for

the year ending 31 December 2006 remained the same as the

amounts approved by the Shareholders at the 2006 SGM.

3. The New Caps

The following table sets out the proposed annual caps for the Additional

Continuing Connected Transactions for the two financial years ending 31

December 2008:

Estimated amounts in RMB '000

for the financial years

Additional Continuing Major type of ending 31 December

Connected Transaction products 2007 2008

(a) Purchases of materials and

automotive components by

members of the Group (other

than Shenyang Automotive)

from Shenyang Automotive

i Purchases of materials and Engine assembly 350,000 530,000

automotive components by

Xing Yuan Dong from

Shenyang Automotive

ii Purchases of materials and Automotive 1,500 1,700

automotive components by fitting,

Shenyang Jindong from including center

Shenyang Automotive control locks,

gear oil, core

of front heaters

(b)Sale of materials and

automotive components by

members of the Group to

connected persons

i Sale of materials and Matching 1,100 1,100

automotive components by components

Shenyang Jindong to JinBei including

and its subsidiaries and reinforcement

associates (other than panel of right

Shenyang Automotive) hand side front

wheel mudguide

wing

ii Sale of materials and Front axle, view 138,000 145,000

automotive components by mirror,

Ningbo Ruixing to Shenyang suspension,

Automotive carpet and roof

pad

iii Sale of materials and Product design 6,700 7,300

automotive components by

Shanghai Hidea to Shenyang

Automotive

iv Sale of materials and Cylinder heads 8,500 9,600

automotive components by of engines,

Mianyang Ruian to Shenyang camshafts

Automotive

v Sale of materials and Matching 43,000 47,000

automotive components by components,

Shenyang Jindong to including

Shenyang Automotive anti-impact beam

sub-assembly of

slide door,

back-plate of

anti-impact beam

of slide door,

mounting plate

of antenna,

anti-impact beam

assembly of left

hand side front

door

4. Basis of the Revised Caps and the New Caps

As stated in the circular issued by the Company dated 23 January 2006,

in determining the value of the caps for the Relevant Continuing Connected

Transactions for the three financial years ending 31 December 2008, the

Board had taken into account the following factors:

-- the anticipated growth of the automobile industry in the PRC in the

three financial years ending 31 December 2008, which will lead to an

increase in demand for the existing models of minibuses and sedans

manufactured by the Group;

-- the scheduled launch of new models of minibuses and sedans and new

range of automobiles in the three financial years; and

-- the anticipated sales of minibuses and sedans in the three financial

years, particularly the marketing strategy of the Group to increase

its market share in the domestic sedan market in the PRC.

In addition to the abovementioned factors, the Directors have taken into

account the following factors in arriving at the Revised Caps and the New

Caps:

-- the substantial growth experienced in 2006 and the anticipated

continuous growth of the automobile industry in the PRC in the two

financial years ending 31 December 2008, which will lead to an

increase in demand for products of the Group;

-- the favorable reception of the series of new models of Zhonghua

sedans and Granse minibuses by the market has led to a substantial

revision of the anticipated sales and accordingly the volume of

materials and automotive components required to meet the expected

demand. As stated in the 2006 Interim Report, Shenyang Automotive

sold 37,571 minibuses and 19,398 Zhonghua sedans in the first half of

2006, representing an increase of 27.50% and 321.90% from the

corresponding period in 2005, with the growth of Zhonghua sedans

sales expected to further accelerate subsequent to the first half of

2006;

-- the continued launch of new models of Zhonghua sedans and minibuses

in 2007 and 2008 will require new components which necessitate the

entering into of the Additional Continuing Connected Transactions;

-- the intended increase in the export of minibuses and sedans to

overseas markets such as Europe and Egypt in the financial years 2007

and 2008 which will lead to increase in the purchases and sales

volume of materials and automotive components between the members of

the Group and the connected parties;

-- changes in product mix in response to market demand resulted in

changes in the types of materials and automotive components used and

the monetary value of the purchases of such materials and automotive

components from the connected parties (Relevant Continuing Connected

Transaction (b)(i));

-- Shen Yang Saic Brilliance Automobile Transmission Co., Ltd., one of

the suppliers of main decelerator assemblies became a member of the

JinBei Group in December 2005. As the Caps were calculated by

reference to historical information up to 30 June 2005, purchases

from Shen Yang Saic Brilliance Automobile Transmission Co., Ltd. were

not included in the Cap for Relevant Continuing Connected Transaction

(a)(iii). However, as a result of the said restructuring, the Revised

Caps will include these purchases from Shen Yang Saic Brilliance

Automobile Transmission Co., Ltd.; and

-- as Shenyang Brilliance Power only commenced production in the second

half of 2006, accordingly, the Caps for the Relevant Continuing

Connected Transactions (b)(iii) and (c)(v) have to be revised. It is

also anticipated that with the expected increase in sales of

minibuses and sedans, the financial years 2007 and 2008 will

experience a great rise in demand for the power trains produced by

Shenyang Brilliance Power leading to a significant increase in the

monetary value for the Revised Caps for the years ending 31 December

2007 and 2008.

III. THE FINANCIAL ASSISTANCE

On 15 December 2006,

(a) an agreement for the provision of cross guarantee in respect of

banking facilities in the amount of RMB1.5 billion is entered into

between Shenyang Automotive and Xing Yuan Dong; and

(b) an agreement for provision of cross guarantee in respect of banking

facilities in the amount of RMB500 million is entered into between

Xing Yuan Dong and JinBei.

The banking facilities, that will be granted to each of Shenyang

Automotive, Xing Yuan Dong and JinBei, will be for a term of one year

commencing from 1 January 2007 to 31 December 2007. In the event of the

cross guarantees are to be extended for more than one year along with the

renewal of the banking facilities, the Company has to comply with all the

relevant requirements under Chapter 14A of the Listing Rules. No fee is

payable or charged and no securities will be taken or provided in relation

to the provision of the cross guarantees.

Pursuant to such agreements, Shenyang Automotive and Xing Yuan Dong will

provide cross guarantees to each other's banking facilities in the amount of

RMB1.5 billion and Xing Yuan Dong and JinBei will provide cross guarantees

to each other's banking facilities in the amount of RMB500 million.

Each of JinBei and Shenyang Automotive are connected persons of the

Company. The provision of the cross guarantees between Shenyang Automotive

and Xing Yuan Dong and the cross guarantees between Xing Yuan Dong and

JinBei constitute connected transactions under Rule 14A.13(2)(a)(i), Rule

14A.13(b)(ii) and Rule 14A.14(3) of the Listing Rules and are subject to the

reporting, announcement and independent shareholders' approval requirements

under Rule 14A.63 of the Listing Rules. As the percentage ratios for the

Financial Assistance is more than 25% but less than 100%, the Financial

Assistance also constitutes a major transaction under Chapter 14 of the

Listing Rules and has to be subject to the approval of the Shareholders.

Given that no connected person which is a party to the Financial Assistance

is a Shareholder, all Shareholders are eligible to vote on the ordinary

resolution to be proposed at the Special General Meeting in respect of the

Financial Assistance.

IV. REASONS FOR THE CONTINUING CONNECTED TRANSACTIONS, THE ADDITIONAL

CONTINUING CONNECTED TRANSACTIONS AND THE FINANCIAL ASSISTANCE

Reasons for the Continuing Connected Transactions and the Additional

Continuing Connected Transactions

The Group is engaged in the manufacture and sale of minibuses and

automotive components and sedans. The manufacture and sale of minibuses and

sedans by the Group is carried out by Shenyang Automotive, a 51% owned

subsidiary of the Company. The other subsidiaries of the Company are mainly

engaged in the manufacture and sale of automotive components in the PRC, and

some of such automotive components are sold to Shenyang Automotive for use

in its assembly process as an automobile manufacturer. The Continuing

Connected Transactions and the Additional Continuing Connected Transactions

are carried out in the ordinary and usual course of business of the Group.

The Group purchases raw materials and basic automotive components in its

ordinary and usual course of business to be used in the manufacturing of

automotive components and for processing into core automotive components for

use in automobile manufacturing. The Group will purchase raw materials and

automotive components from the JinBei Group and Shenyang Automotive where

the price offered by such companies are more favourable than other suppliers

in order to control the costs of production of automobiles produced by the

Group.

In addition, the Group also purchases engines and other core automotive

components from the connected persons so as to ensure the quality of the

core automotive components, and also to ensure the technology used in the

production of such core automotive components remained within the control of

the Group. It is believed that control over such core automotive components

will enable the Group to exercise more effective control over the quality of

the automobiles produced by the Group.

As stated in the Announcement, the Continuing Connected Transactions are

entered into to enable the Group (i) to have more control over quality and

technology of automotive components used in its production; (ii) to purchase

materials and automotive components from manufacturers within close

proximity to the production facilities to reduce cost and to enhance

competitiveness of the Group; and (iii) to centralize the purchases of

materials and automotive parts to enjoy better pricing of bulk purchases.

As a result of the various changes in the market conditions explained in

the sub-paragraph headed "Basis of the Revised Caps and the New Caps" above,

particularly encouraging sales performance of the Group's minibuses and

Zhonghua sedans in the first half of 2006, which has recorded an increase of

approximately 28% and 322%, respectively from the corresponding period in

2005, the Board considered it necessary to revise the Caps for the Relevant

Continuing Connected Transactions.

In addition, the Group has plans to launch new models of its minibuses

and Zhonghua sedans in 2007 and 2008 which will require new components and

suppliers. Therefore, for the same underlying reasons for the Continuing

Connected Transactions, it is beneficial for the Group to enter into the

Additional Continuing Connected Transactions.

In the premises, the Directors (including the independent non-executive

Directors) consider the Relevant Continuing Connected Transactions and the

Additional Continuing Connected Transactions to be entered into in the

ordinary and usual course of business and the terms of such transactions as

governed by the framework agreements, the Revised Caps and the New Caps to

be fair and reasonable in so far as the Shareholders are concerned.

Reasons for the Financial Assistance

With the tightening of the lending regulations of the banks in the PRC,

it is becoming a common practice for banks in the PRC to request for either

a guarantee or securities from a third party to secure banking facilities

granted to borrowers. Shenyang Automotive is the subsidiary within the Group

principally engaged in the manufacturing of automobiles and automotive

components. Shenyang Automotive will utilize its banking facilities to

finance the increase in demand for newly introduced model of sedans, the

expansion of its production capacity in anticipation of the scheduled launch

of new models of minibuses and sedans and the business strategy of

increasing the market share of the Group in the domestic sedan market in the

PRC.

JinBei's banking facilities will be utilized by JinBei as working

capital to improve the quality and volume of the automotive components

currently produced by the JinBei Group and the expansion of its product

range and production facilities. Since members of the JinBei Group are

suppliers of the Group, the Directors believe that the Group will be able to

benefit from the improved quality of the automotive components manufactured

by the JinBei Group and with the anticipated launch of the new models of

minibuses and sedans, the Group will also be able to benefit from the

improvement in production facilities and increase in product range of the

JinBei Group.

Xing Yuan Dong is one of the subsidiaries of Group engaged in the

manufacturing of automotive components. Xing Yuan Dong's banking facilities

secured by the guarantees provided by JinBei and Shenyang Automotive will be

utilized by Xing Yuan Dong to improve its production facilities in order to

support the substantial increase in production volume and the future launch

of new models of minibuses and sedans.

In the premises, the Directors consider the provision of the financial

assistance to and from the connected persons of the Company to be in the

interest of the Group and that the terms of the agreements in relation to

the provision of the cross guarantees to be fair and reasonable in so far as

the Shareholders are concerned.

V. INCREASE IN AUTHORISED SHARE CAPITAL AND AMENDMENT TO BYE-LAWS

References is made to the announcement made by the Company dated 9 May

2006 and the circular issued by the Company dated 30 May 2006 in relation to

the issue of the Convertible Bonds 2011 in an aggregate amount of

approximately US$183 million by Brilliance China Finance Limited, a wholly-

owned subsidiary of the Company.

It is one of the terms of the Convertible Bonds 2011 that the

Conversion Price shall be adjusted on the First Reset Date and the Second

Reset Date if the Average Market Price per Share for 20 consecutive days on

which the Stock Exchange is open for trading immediately prior to the First

Reset Date and the Second Reset Date is less than the conversion price on

the relevant reset date, provided that the adjusted conversion price shall

not be less than 68% and 75%, respectively, of the conversion price

prevailing at the First Reset Date and the Second Reset Date. Based on the

initial Conversion Price of HK$1.93 and the maximum reset rate, the lowest

possible conversion price will be reset to HK$0.9843 and the maximum number

of Shares to be issued by the Company upon full conversion of the

Convertible Bonds 2011 at the lowest possible conversion price will be

approximately 1,438,600,000 Shares.

As at the date of this announcement, the Company has an authorised share

capital of US$50,000,000 divided into 5,000,000,000 Shares and a total of

3,668,390,900 Shares in issue. Taking into account approximately

1,438,600,000 Shares that may be issued upon full conversion of the

Convertible Bonds 2011 at the lowest possible conversion price of HK$0.9843

per Share, the Company will have an issued share capital of about

US$51,069,909. In the event of a full exercise of the conversion rights

attaching to the outstanding Convertible Bonds 2011 at the lowest possible

conversion price of HK$0.9843 per Share, the Company will not have

sufficient authorised share capital for the issue and allotment of the

additional Shares. As such, the Board proposed to increase the authorised

share capital of the Company from US$50,000,000 to US$80,000,000 by the

creation of an additional 3,000,000,000 Shares of US$0.01 each. The proposed

increase of authorised share capital of the Company is subject to

Shareholders' approval by way of an ordinary resolution to be proposed at

the Special General Meeting.

Subject to the approval of the increase in authorised share capital by

the Shareholders, the Board proposed to amend bye-law 6.(A) of the Bye-Laws

of the Company to reflect the increased authorised share capital of the

Company. The proposed amendment to the Bye-Laws is subject to the approval

of the Shareholders by way of a special resolution to be proposed at the

Special General Meeting.

VI. GENERAL

Each of JinBei, its subsidiaries and associates (other than Shenyang

Automotive) and Shenyang Automotive are connected persons of the Company

within the meaning of the Listing Rules. Accordingly, the purchases of

materials and automotive components, the sale of automobiles, materials and

automotive components and the provision of financial assistance by/to the

Group to/by JinBei, its subsidiaries and associates (other than Shenyang

Automotive) and Shenyang Automotive constitute connected transactions under

Chapter 14A of the Listing Rules. The Financial Assistance also constitutes

a major transaction under Chapter 14 of the Listing Rules.

An Independent Board Committee has been established to advise the

Shareholders as to (i) the Revised Caps; (ii) the Additional Continuing

Connected Transactions and the New Caps; and (iii) the Financial Assistance.

An independent financial adviser will be appointed to advise the

Independent Board Committee and the Shareholders in respect of the Revised

Caps, the Additional Continuing Connected Transactions and the New Caps and

the Financial Assistance. Given that no connected person which is a party to

the Relevant Continuing Connected Transactions, the Additional Continuing

Connected Transactions and Financial Assistance is a Shareholder, all

Shareholders are eligible to vote on the ordinary resolutions to be proposed

at the Special General Meeting in respect of the Revised Caps, the

Additional Connected Transactions and the New Caps and the Financial

Assistance.

A circular containing, amongst other things, details of the Relevant

Continuing Connected Transactions, the Revised Caps, the Additional

Continuing Connected Transactions, the New Caps, the Financial Assistance

and the proposed increase in authorised share capital and amendment to the

Bye-Laws, letters from the Independent Board Committee and from the

Independent Financial Adviser and a notice to Shareholders convening the

Special General Meeting to approve (i) the Revised Caps; (ii) the

Additional Continuing Connected Transactions and the New Caps; (iii) the

Financial Assistance; (iv) the proposed increase in authorised share

capital; and (v) the proposed amendment to the Bye-Laws will be dispatched

to Shareholders as soon as practicable.

VII. DEFINITIONS

In this announcement, unless otherwise defined, terms used herein shall

have the following meanings:

"2006 Interim Report" the unaudited consolidated interim financial

statements of the Group for the six months

ended 30 June 2006;

"2006 Interim Results" the results of the Group for the six months

ended 30 June 2006;

"2006 SGM" a special general meeting held on 10

February 2006 to approve, among others, the

Continuing Connected Transactions and the

Caps;

"Additional Continuing the transactions between members of the

Connected Transactions" Group and the connected persons as set out

in the sub- paragraph headed "The Continuing

Connected Transactions - The Additional

Continuing Connected Transactions" in this

announcement;

"Announcement" the announcement made by the Company dated

16 December 2005 in relation to, among

others, the Continuing Connected

Transactions and the Caps;

"associates" has the meaning ascribed thereto in the

Listing Rules;

"Average Market Price" the average of the closing price of the

Shares on the Stock Exchange;

"Board" the board of Directors;

"Bye-Laws" the bye-laws of the Company;

"Caps" the estimated annual monetary value of the

Continuing Connected Transactions for the

three financial years ending 31 December

2008 as set out in the sub-paragraph headed

"The Caps - Proposed annual caps" in the

Announcement and approved by the

Shareholders at the 2006 SGM;

"ChenFa" Shenyang ChenFa Automobile Component Co.,

Ltd., a wholly foreign owned enterprise

established in the PRC on 19 June 2003 and a

wholly-owned subsidiary of the Company. The

principal activities of ChenFa are the

development, manufacture and sale of power

trains in the PRC;

"Company" Brilliance China Automotive Holdings

Limited, an exempted company incorporated in

Bermuda with limited liability, whose

securities are listed on the Stock Exchange

and the New York Stock Exchange, Inc.;

"connected persons" has the meaning ascribed thereto in the

Listing Rules;

"Continuing Connected the transactions between members of the

Transactions" Group and the connected persons as set out

in the paragraph headed "The Continuing

Connected Transactions" in the Announcement;

"Conversion Price" HK$1.93 per Share (subject to adjustment);

" Convertible Bonds 2011" convertible bonds in an aggregate principal

amount of approximately US$183 million

issued by Brilliance China Finance Limited

on 7 June 2006 and maturing on 7 June 2011;

"Directors" the directors of the Company;

"Dongxing" Shenyang Brilliance Dongxing Automotive

Component Co., Ltd., a wholly foreign owned

enterprise established in the PRC on 17

March 1999 and a wholly-owned subsidiary of

the Company. The principal activities of

Dongxing are the manufacture and trading of

automotive components and remodelling

minibuses and sedans in the PRC;

"Financial Assistance" the financial assistance provided to/by the

Group by/to connected persons as set out in

the paragraph headed "The Financial

Assistance" in this announcement;

"First Reset Date" 10 March 2007;

"Group" the Company and its subsidiaries;

"Independent Board the independent committee of Board,

Committee" comprising of Mr. Xu Bingjin, Mr. Song Jian

and Mr. Jiang Bo, all of whom are

independent non-executive Directors, formed

to advise the Shareholders as to (i) the

Revised Caps; (ii) the Additional Continuing

Connected Transactions and the New Caps; and

(iii) the Financial Assistance;

"Independent Financial an independent financial adviser to be

Adviser" appointed for the purpose of advising the

Independent Board Committee and the

Shareholders as to (i) the Revised Caps;

(ii) the Additional Continuing Connected

Transactions and the New Caps; and (iii) the

Financial Assistance;

"JinBei" Shenyang JinBei Automotive Company Limited,

a company incorporated in the PRC on 14 May

1984 whose shares are listed on the Shanghai

Stock Exchange and holder of the 49% equity

interests in Shenyang Automotive;

"JinBei Group" JinBei and its subsidiaries and associates,

other than Shenyang Automotive;

"Listing Rules" the Rules Governing the Listing of

Securities on the Stock Exchange;

"Mianyang Ruian" Mianyang Brilliance Ruian Automotive

Components Co., Ltd., a wholly foreign owned

enterprise established in the PRC on 3 July

2000 and a wholly-owned subsidiary of the

Company. The principal activities of

Mianyang Ruian are manufacture and trading

of automotive components;

"New Caps" the estimated annual monetary value of the

Additional Continuing Connected Transactions

for the two financial years ending 31

December 2008 as set out in the

sub-paragraph headed "The New Caps" in this

announcement;

"Ningbo Ruixing" Ningbo Brilliance Ruixing Auto Components

Co., Ltd., a wholly foreign owned enterprise

established in the PRC on 9 June 2000 and a

wholly-owned subsidiary of the Company. The

principal activities of Ningbo Ruixing are

the manufacture and trading of automotive

components;

"Ningbo Yuming" Ningbo Yuming Machinery Industrial Co.,

Ltd., a wholly foreign owned joint venture

established in the PRC on 14 August 1993.

Ningbo Yuming is currently a wholly foreign

owned enterprise in the PRC and a wholly

owned subsidiary of the Company. The

principal activities of Ningbo Yuming are

the manufacture and sale of automotive

components in the PRC;

"PRC" The People's Republic of China and for the

sole purpose of this announcement shall

exclude Hong Kong, Macau Special

Administrative Region and Taiwan;

"RMB" renminbi, the lawful currency of the PRC;

"Relevant Continuing the transactions between members of the

Connected Transactions" Group and the connected persons as set out

in the paragraph headed "The Relevant

Continuing Connected Transactions" in this

announcement;

"Revised Caps" the revised estimated annual monetary value

of the Relevant Continuing Connected

Transactions for the two financial years

ending 31 December 2008 as set out in the

sub-paragraph headed "The Revised Caps" in

this announcement;

"Second Reset Date" 10 March 2008;

"Shanghai Hidea" Shanghai Hidea Auto Design Co., Ltd., an

equity joint venture enterprise established

in the PRC on 16 April 2004 and in which the

Company has an effective equity interests of

63.25%. The principal activities of Shanghai

Hidea are design of automobiles;

"Shareholder(s)" holder(s) of Shares of the Company;

"Shares" shares of US$0.01 each of the Company;

"Shenyang Automotive" Shenyang Brilliance JinBei Automobile Co.,

Ltd., a sino-foreign equity joint venture

established in the PRC on 19 July 1991 and

whose equity interests are owned as to 51%

by the Company and as to 49% by JinBei. The

principal activities of Shenyang Automotive

are the manufacture, assembly and sale of

minibuses and sedans as well as automotive

components in the PRC;

"Shenyang Brilliance Shenyang Brilliance Power Train Machinery

Power" Co., Ltd.), an equity joint venture

established in the PRC on 13 December 2004

in which the Company has an effective equity

interest of 75.01%. The principal activities

of Shenyang Brilliance Power are the

manufacture and sale of power trains in the

PRC;

"Shenyang Jindong" Shenyang Jindong Development Co., Ltd., an

equity joint venture established in the PRC

on 18 April 2002 in which the Company has an

effective equity interest of 75.50%. The

principal activities of Shenyang Jindong are

trading of automotive components;

"Special General Meeting" the special general meeting of the Company

to be convened for the purpose of

considering, and if thought fit, approving

(i) the Revised Caps; (ii) the Additional

Continuing Connected Transactions and the

New Caps; (iii) the Financial Assistance;

(iv) the proposed increased in authorised

share capital; and (v) the proposed

amendment to the Bye-Laws;

"Stock Exchange" The Stock Exchange of Hong Kong Limited;

"US$" United States dollars, the lawful currency

of the United States of America; and

"Xing Yuan Dong" Shenyang XingYuanDong Automobile Component

Co., Ltd., a wholly foreign owned enterprise

established in the PRC on 12 October 1998

and a wholly-owned subsidiary of the

Company. The principal activities of Xing

Yuan Dong are the manufacture and trading of

automotive components in the PRC.

As at the date of this announcement, the Board comprises five executive

Directors, Mr. Wu Xiao An (also known as Mr. Ng Siu On) (Chairman), Mr. Qi

Yumin (Chief Executive Officer), Mr. He Guohua, Mr. Wang Shiping and Mr. Lei

Xiaoyang (Chief Financial Officer); and three independent non-executive

Directors, Mr. Xu Bingjin, Mr. Song Jian and Mr. Jiang Bo.

By order of the Board

Brilliance China Automotive Holdings Limited

Wu Xiao An

(also known as Ng Siu On)

Chairman

Hong Kong, 15 December 2006

The Stock Exchange of Hong Kong Limited takes no responsibility for the

contents of this announcement, makes no representation as to its accuracy or

completeness and expressly disclaims any liability whatsoever for any loss

howsoever arising from or in reliance upon the whole or any part of the

contents of this announcement.

CONTACTS:

Lisa Ng

Brilliance China Automotive Holdings Limited

t: +852-2523-7227

Carol Lau

Weber Shandwick in Hong Kong

t: +852-2533-9981

Source: Brilliance China Automotive Holdings Limited
Keywords: Food/Beverages
collection