Overall listing of Guangzhou Auto permitte

　　Guangzhou Automobile Group goes public by back door listing of H-share Company Denway Motors (0203.HK) made significant progress. Currently, the plan has got through hearing of Hong Kong Stock Exchange. Guangzhou Automobile Group and Denway will hold a joint press conference in Hong Kong this morning.

　　Step one foot

　　On May 19, Guangzhou Automobile Group and Denway will hold a joint press conference. Zhang Fangyou, chairman of Guangzhou Automobile Group, Zeng Qinghong, general manager of Guangzhou Automobile Group, Lu Sa, secretary to chairman of Guangzhou Automobile Group, and Li Tun, general manager of Denway will attend the conference. On the conference, they will describe plans of Guangzhou Automobile Group’s listing on Hong Kong Stock Exchange by back door listing of Denway and privatization of Denway.

　　It is understood that Guangzhou Automobile Group would announce consideration because it matters whether shareholders pass the privatization program of Denway or not.

　　Guangzhou Automobile Group’s listing by back door listing of H-share Company Denway Motors is just the first step, but this step is not easy. On January 22 of this year, Guangzhou Automobile Group and Denway Motors joint announced that they had submitted a new listing application to Hong Kong Stock Exchange on January 19 of this year, and announced Guangzhou Automobile Group would allow trading its H-shares on Hong Kong Stock Exchange by back door listing. In addition, it would fully purchase Denway by using the new shares issued as consideration. Guangzhou Automobile Group hired JP Morgan Chase, Morgan Stanley and China International Capital Corporation Limited as a financial adviser. On April 22, Denway Motors announced it had appointed BNP Paribas Capital (Asia Pacific) Limited as an independent financial adviser.

　　However, on February 23 Denway announced listing of Guangzhou Automobile Group may be subject to various conditions, and there exists uncertainty. On April 26, Denway clarified the report about no permission from Hong Kong Stock Exchange for Guangzhou Automobile Group’s H-shares listing plan. Denway said Guangzhou Automobile Group’s H-shares listing plan by back door listing was still being processed. On April 29, Denway suddenly announced trade suspension in order to prepare for hearing held by Hong Kong Stock Exchange for overall listing plan of Guangzhou Automobile Group. At present, the plan has got through hearing of Hong Kong Stock Exchange, marking Guangzhou Automobile Group’s H-shares listing plan made a significant progress.

　　Professionals have pointed out that Guangzhou Automobile Group has to pass at least hurdles before listing via Denway Motors. First one is the forthcoming meeting of shareholders during which investors of Denway Motors will conduct a comprehensive assessment of Guangzhou Automobile Group's listing decision. The offered price has to satisfy those independent shareholders who hold the rights to vote. In addition, representatives have to reach consent on the privatization program. Only based on those two conditions can the program be implemented. Second one is the hearing from High Court. Only by passing through High Court's hearing, the listing of Guangzhou Automobile Group on H market can succeed.

　　Denway Motors is the Hong Kong-listed flagship of Guangzhou Automobile Group and was listed in Hong Kong in the year of 1993. Its assets include the 50% stake of Guangzhou Honda, shares of Honda exports base and assets of Guangzhou Automobile's bus business. Guangzhou Automobile holds 37.9% shares of Denway Motors. The price of Denway Motors share was 4.56 Hong Kong dollars by the trading halt, up 3.17% compared with the previous trading day.

　　So when will Guangzhou Automobile be listed on H share market as a whole? Lu Sa, the secretary of Guangzhou Automobile announced that the listing process is quite complicated and Guangzhou Auto has to go through many procedures. It is really difficult to control the specific time. However, Guangzhou Automobile still hopes to finish the listing program within the year.

　　Analysts pointed out that the listing of Guangzhou Automobile as a whole had gone through a tortuous path. Although operations have lasted for several years, Guangzhou Automobile has not been able to carry out IPO in A share market when facing the constraints of accounting system. The main earnings for Guangzhou Automobile come from Guangzhou Toyota and Guangzhou Honda-two joint ventures which do not enable Guangzhou Automobile to a controlling stake. However, Guangzhou Automobile used one billion yuan to take over Changfeng Auto to get preparations for the listing on A share market. Currently, Guangzhou Automobile Group finally has a larger financing platform by the overall listing through Denway Motors. (Translator: Qinghua/Hanxin&Wade)

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