(Yicai Global) Feb. 15 -- Aotecar New Energy Technology plans to make Changan Automobile Group its majority shareholder through the transfer of part of the current owner’s equity and the issuance of new shares as the Chinese auto air conditioning compressor manufacturer looks for strong backing in uncertain times.

Zhang Yongming is preparing to transfer 320 million shares or 9.9 percent equity to state-owned Changan Auto and will issue more new shares in a private placement to consolidate the control of the Chongqing-based carmaker, Aotecar said yesterday, without giving any details on pricing.

Zhang, who holds 22.85 percent equity and 28.87 percent voting rights, may give up some of his voting rights and make certain adjustments to the corporate governance structure to ensure Changan Auto is in charge, it added.

The soaring price of raw materials and metals, as well as the global chip shortage, have pushed Aotecar into the red. In 2020, the Nantong, southeastern Jiangsu province-based company racked up losses of CNY296 million (USD46.6 million) in its first deficit since going public in 2008. It is still expecting losses of up to CNY90 million (USD14 million) in 2021 despite bagging CNY442 million (USD70 million) in a private placement.

Aotecar, which counts auto giants Volkswagen, Geely and BYD among its clients, held a 20 percent share in China’s car air-conditioning compressor market in 2020.

Aotecar’s share price [SHE:002239] closed up 5.8 percent at CNY3.60 (USD0.60). Trading was suspended from today as the reorganization takes place.

Editor: Kim Taylor