Reports in Chinese media say Geely Automobile has been under pressure from foreign investors lately as the automaker owes large sums to foreign investors.
According to an article from capitalweek.com.cn, Geely had borrowed high interest funds when purchasing Volvo, with liability rates now exceeding 73 percent.
Geely’s lawyers were quick to deny the reports, calling them entirely unfounded and aimed at ruining the image of the carmaker and of CEO Li Shufu. They also added that they are taking legal measures against the website. According to the report from capitalweek.com.cn, Geely was able to acquire Volvo after it borrowed loans from the authorities and national banks and issued high interest bonds to foreign banks.
Geely Holdings’ liabilities have soared from 4.78 billion yuan ($698.66 million) to 71.07 billion yuan ($10.69 billion) last year, an increase of 73.4 percent. According to an August investment report by Goldman Sachs, Geely secretly began contacting foreign private equity firms such as the Carlyle Group in order to have Goldman Sachs’ bonds returned.
The story gave a damaging media blow to the Chinese carmaker, who has already filed claims agains the site. Geely also stated that its liability rates were reasonable and not a cause for concern, as Western manufacturers generally have rates of 70 to 80 percent.