(Yicai) Sept. 12 -- Shares in Lingyun Industrial advanced as much as 1.4 percent today after the Chinese automotive lightweight structural parts supplier said that it plans to inject EUR55 million (USD60.7 million) into its loss-making German subsidiary Waldaschaff Automotive to reduce its debts and overcome operating difficulties.

Lingyun’s share price [SHA:600480] was trading down 0.2 percent at CNY7.62 (USD1) as of 2 p.m. However, earlier in the day it climbed to CNY7.75.

The cash injection will go towards repaying Waldaschaff’s debts, boost the confidence of customers and suppliers, so that its German subsidiary can reduce procurement costs and attract more high-level projects, Zhuozhou-based Linyun said yesterday. 

Waldaschaff, which makes lightweight structural parts such as automobile anti-collision systems and battery casings, is facing declining orders in the auto market, Lingyun said. Waldaschaff counts big carmakers such as Volkswagen and BMW among its clients. In the first quarter it was recognized as a A-level supplier by Porsche.

Despite this stellar line-up, Waldaschaff has been struggling in recent years. In the first half it haemorrhaged CNY68.4 million (USD9.6 million) on revenue of CNY1 billion (USD140.4 million). Last year the the Waldaschaff-based company squandered CNY145 million (USD20.3 million) on revenue of CNY2.4 billion (USD337.1 million). It had net assets of CNY289 million (USD40.5 million) as of the end of last year.

Lingyun has said in its semi-annual and 2023 financial reports that it is trying to get the company, which has a registered capital of EUR124.5 million (USD137.2 million), out of trouble.

Lingyun paid EUR3.5 million (USD3.8 million) plus EUR665,000 (USD732,700) in value-added tax for 100 percent equity in Waldaschaff in April 2015. At the time, Lingyun said that Waldaschaff had cutting-edge technology in lightweight auto parts and was a leader in the manufacturing of several types of anti-collision structural components.

Editor: Kim Taylor