Baoneng Group from China has just bailed out struggling automotive company part owned by a millionaire from Israel. Baoneng bought a 51% stake in Qoros, a company that at one time expected that 10% of its sales would eventually come from Europe. The group paid about USD1 billion.
Qoros, founded in 2007 as a 50-50 joint venture with Chery Automobile targeting the country’s growing number of first-time car buyers, struggled to overcome entrenched skepticism of Chinese-made cars. Its premium pricing killed its sales. It reported a 1.9 billion-yuan (USD279 million) loss in 2016 and has been kept afloat with 1.8 billion yuan of loans from Kenon and Chery, and another 450 million yuan from Isreal millionaire, Ofer personally, according to its annual report.
As part of the sales agreement, buyer Baoneng will assume a proportionate share of Kenon and Chery loans, and has agreed to buy 100,000 vehicles a year through 2020. Kenon also has the option to sell its remaining stake in the business for 3.1 billion yuan over the next five years.
