BYD plans to issue bonds to restructure debt
BYD Co., the Chinese automaker partly owned by Warren Buffett's Berkshire Hathaway Inc., plans to issue bonds worth as much as 6 billion yuan ($939 million) to restructure its debt and raise working capital.
BYD did not say when it plans the bond offering, which has not yet been approved by the China Securities Regulatory Commission.
The bonds, whose interest rate will be determined, will be issued on the domestic market and will have a maturity of no more than 10 years, BYD said in a statement.
BYD's debt reached 16.4 billion yuan at the end of June, an increase of 17 percent from a year earlier, according to the company's mid-2011 financial report. Short-term debt, which will mature within a year, accounted for 68 percent of the total.
In the first six months of 2011, BYD's sales dropped 23 percent year-on-year to 220,131 vehicles while its profit plunged 89 percent to 275 million yuan.
At a press conference last week in Hong Kong, BYD's president, Wang Chuanfu, attributed the disappointing results to two factors: the elimination of sales tax breaks by the Chinese government last December, and the company's over-aggressive dealership expansion, which led to the closure of 200 of its 1,000 dealerships since last year.