Kenon reduces Qoros stake

Qoros electric car  photo: PR

A new Chinese investor will invest 6.5 billion yuan for one third of loss-making auto venture Qoros.

Idan Ofer's Kenon Holdings (NYSE: KEN; TASE: KEN) is parting from control of loss-making Chinese automotive venture Qoros. Qoros is 50% owned by Kenon unit Quantum and 50% by Chinese auto maker Chery. Kenon reports that it and Chery have agreed with a new Chinese investor on an investment of 6.5 billion yuan ($942 million) in Qoros is exchange for a third of the company.

The investment is subject to a number of preconditions, some of which are beyond the control of the parties to the agreement and may not be fulfilled. They include regulatory permissions and completion of regulatory processes, agreement by financing bodies, and conclusion of further agreements.

Kenon also reported that the investment agreement signed by Qoros, Quantum and Chery with Yibin Municipal Government, that was announced on April 6 this year, will not come into force, and that he municipality's investment platform company Yibin will not make an equity investment in Qoros.

The investment in Qoros is one of Kenon's main problems. The Chinese company has been posting heavy losses, burning tens of millions of dollars a quarter. In the first quarter of this year, Qoros lost $41 million, following accumulated losses of $647 million in the period 2015-2016.

Unlike in 2016, when Qoros reported rapid growth in revenue, in the first quarter of 2017 revenue fell a worrying 21% to $59 million. This was explained by a 24% drop in sales of vehicles to 3,700 units in the first quarter of this year, compared with 4,900 in the corresponding quarter.

During the first quarter, Kenon injected $57 million into Qoros, but Qoros ended the quarter with just $9 million cash. In April, Kenon injected a further $15 million, and it is committed to another $42 million.

Published by Globes [online], Israel business news - www.globes-online.com - on June 18, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

5 Comments
View comments in rows
Update by email about comments talkback
POST
Comments
Your name
Please insert your name
Content
Hyperlink in a new window Hyperlink Right Left underline italic bold Bulleted List Ordered List Face1 Face2 Face3 Face4 Face5 Face6
Your comment

Thanks
You comment was recieved and soon will be published.
In posting comments, I agree to abide by the Terms of Use
Globes encourages lively and frank debate, but posts that the editors consider merely abusive or otherwise inappropriate will be removed. Report inappropriate content
Thank you for posting your comment, which will be reviewed for publication.
Loading Comments...load
Load more comments
Qoros electric car  photo: PR
Qoros electric car photo: PR
Twitter Facebook Linkedin RSS Newsletters גלובס MAD Conference 2017