(Yicai) June 6 -- Shares of HT-SAAE fell after the Chinese vehicle thermal management systems components supplier said it will sell its long-term loss-making European subsidiary. 

HT-SAAE [SHA: 600151] closed down 3.1 percent at CNY4.69 (65 US cents) a share in Shanghai today, after earlier dropping by as much as 4.8 percent.

HT-SAAE will sell Estra Automobile Systems Luxembourg, which it set up in 2020 for EUR35 million (USD38 million), to Austria's Innerio Heat Exchanger for EUR27 million, the Shanghai-based firm announced late yesterday. 

Innerio Hear will also pay EUR21.6 million of Estra Auto's debts to HR-SAAE and related parties, including short-term loans and accounts payable, while undertaking the contracts of all employees of the target company, the Chinese firm noted.

Estra Auto is the certified supplier of four vehicle projects for European carmakers BMW and Stellantis, which will likely bring CNY5.9 billion (USD814 million) in sales income over their contract duration, according to HR-SAAE.

However, Estra Auto has been losing money for a long time, with its net loss reaching CNY474 million (USD65.1 million) last year, HR-SAAE noted, but added that the loss has narrowed to CNY52.8 million (USD7.3 million) in the first four months of this year.

The deal can help HT-SAAE effectively recover its debts, reduce loss risks, and prevent risk spillover, it said. The company made an asset impairment provision of CNY214 million for Estra Auto's Luxembourg business last year, which was equal to nearly half of its CNY426 million annual loss, according to its 2023 earnings report.

Editor: Martin Kadiev