The Refinancing of Shanghai General Motors

Shanghai General Motors was founded in 1997 as a joint venture between

General Motors and Shanghai Automotive Industry with 50% of ownership with
each of them. Shanghai Automotive Industry is 100% owned by Shanghai
Municipal Government. The joint venture was capitalized with $700 million of
equity injected by the owners and $821 million of debt through the syndicated
loan facility from banks. The syndicated loan of $821 million USD was equivalent
to : $472 million of long term USD denominated debt provided by foreign and
local banks, $267 million USD equivalent long term RMB denominated debt, and
$82 million USD equivalent local currency revolving working capital facility
provided by local banks. The dollar denominated debt was priced at a floating
rate of six month Libor + 105 basis point. The RMB denominated debt was
carried at floating rate equal to the People’s Bank Of China rate.

After the successful launch of Buick, an upmarket Sedan and GL8 minivan, SGM
is looking forward for to launch SAIL, a small car modelled after the Opel Corsa
sold in Europe. With the introduction of new product the projected requirement
for working capital in the year 2002 would be around $USD 747. However, for
the syndicated loan banks have put timeline to withdraw $821 miilion by
September 2000. To add on it, the SAIL launch planned in Quarter 2 of 2001
was challenge in funding the project due to the time cap provided by banks.