China Yuchai International Extends Loan Agreement with HL Global Enterprises Limited

Wed Jan 30, 2013 6:05am EST

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SINGAPORE,  Jan. 30, 2013  /PRNewswire/ --  China Yuchai International Limited
(NYSE: CYD)  ("China Yuchai" or the "Company"), announced today that its wholly
owned subsidiary Venture Lewis Limited ("VLL") has entered into a loan agreement
with HL Global Enterprises Limited ("HLGE") ("2013 Loan Agreement") for the
extension of a loan of  S$75,000,000  ("Loan") to HLGE. The original amount of
the Loan was  S$93,000,000  which was granted to HLGE in  February 2009  to
refinance the zero coupon, unsecured, non-convertible bonds ("Bonds") issued by
HLGE in 2006 and which matured on  July 3, 2009  ("Maturity Date"). However, the
principal amount has been reduced to  S$75,000,000  pursuant to partial
repayments of  S$10,000,000  and  S$8,000,000  made by HLGE in  February 2011 
and  April 2012  respectively. The Company through another wholly-owned
subsidiary, Grace Star Services Ltd., owns 48.9% of the issued ordinary shares
of HLGE.

The unsecured Loan has, pursuant to the terms of the 2013 Loan Agreement, been
extended for one year from  July 2013  and is due for repayment in  July 2014.
Under the terms of the 2013 Loan Agreement, the interest payable will remain as
the aggregate of a margin of 1.50% per annum and the 12-month Singapore
Interbank Offer Rate expressed in a percentage rate fixed by the Association of
Banks in  Singapore  for Singapore Dollars as of  January 29, 2013  which was
0.561%. In the event the interest rate charged on external funds utilized by
China Yuchai for their investment in HLGE is increased, the Company has a right
to negotiate with HLGE with a view to agreeing on an increase in the interest
rate payable by HLGE under the 2013 Loan Agreement subject to compliance with
certain regulatory requirements. A negative pledge undertaking against any
disposal or creation of security over substantially all of HLGE's assets without
VLL's consent is also included.  

The Company's Board of Directors approved the Loan extension after taking into
account (i) the continued challenges facing HLGE's hospitality operations in 
China  from increasing competition and the slowdown in  China's economy which
impacted on its results; (ii) the weak financial position of HLGE and its
difficulties in obtaining financing from financial institutions, (iii) the need
to provide continuing support to HLGE to allow it sufficient time to dispose of
its non-performing assets in an orderly manner to repay the Loan, and (iv)
continued efforts being made by HLGE to explore opportunities to grow its
earnings base and improve its cash flow. This transaction has also been reviewed
and approved by the Company's audit committee who has determined that the terms
of the Loan extension are fair and reasonable and are not prejudicial to the
interests of the Company's shareholders. In coming to its decision, in addition
to the various factors set out in this paragraph, the audit committee also
considered the costs and sources of funding for the Loan and the recoverability
of the Loan based on a valuation of HLGE's assets.

About China Yuchai International

China Yuchai International Limited, through its subsidiary, Guangxi Yuchai
Machinery Company Limited ("GYMCL"), engages in the manufacture, assembly, and
sale of a wide array of light-duty, medium-sized and heavy-duty diesel engines
for construction equipment, trucks, buses and cars in  China. GYMCL also
produces diesel power generators, which are primarily used in the construction
and mining industries. Through its regional sales offices and authorized
customer service centers, the Company distributes its diesel engines directly to
auto OEMs and retailers and provides maintenance and retrofitting services
throughout  China. Founded in 1951, GYMCL has established a reputable brand
name, strong research and development team and significant market share in 
China  with high-quality products and reliable after-sales support. In 2011,
GYMCL sold 510,777 diesel engines and is recognised as a leading manufacturer
and distributor of diesel engines in  China. For more information, please visit 
http://www.cyilimited.com

For more information, please contact:  

Kevin Theiss  /  Dixon Chen
Grayling  
Tel: +1-646-284-9409  
Email:  kevin.theiss@grayling.com /  dixon.chen@grayling.com

 

 

 

SOURCE  China Yuchai International Limited

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