Lifan Motorcycle Says It's Not Affected by Lehman Bankruptcy

SHANGHAI - September 22, 2008: Chongqing Lifan Group, China's largest motorcycle maker, says its operations and IPO plan will not affected by the Lehman Brothers bankruptcy in the United States, because its investor AIG is not directly related to the Lehman company and the U.S. government has bailed out giant insurer AIG, reported Jiefang Daily yesterday.

Lifan Group, which is diversifying into car production, said on July 21 that it has sold a 13.5 percent stake to American International Group Inc. (AIG), the largest insurer in the U.S., for $90 million. The deal has won regulatory approval and will pave the way for Lifan's planned stock market listing as well as boost the company¡¯s motorcycle and car operations.

On September 15, amid one of the most tumultuous upheavals in Wall Street's 216-year history, global investment bank Lehman Brothers was forced to declare bankruptcy, the largest ever in the U.S., triggering fears of financial crisis worldwide. Investor concerns quickly turn to AIG, the largest American insurer, as downgrades to its debt by all three credit ratings agencies led to a plunge in its stock price.

On September 16, the U.S. government announced an $85 billion emergency loan to rescue AIG, saying a failure of the insurer could have sent shock waves throughout the global markets. The bomb that would have blown up the AIG was defused by the U.S. Federal Reserve, the insurer's largest shareholder (80%), at the last moment.

A Lifan executive said that AIG's $90 million investment has all arrived in his company and Lifan's operations and IPO plan will not be affected by the Wall Street upheaval. American International Assurance (AIA), AIG's China division based in Shanghai, has recently performed better than its parent company in the U.S. Last week, AIA assured Chinese policyholders that its business is going as usual.

Lifan aimed to raise more than 1 billion yuan ($146.5 million) in an initial public offering (IPO) in the near future and had hired Guotai Junan Securities, a major Chinese brokerage, as its adviser. Both its car and motorcycle assets will be floated, most likely on one of the mainland's bourses.

Lifan began sales of its first self-developed cars in January 2007 in China and overseas. It is investing 2.4 billion yuan in phases to increase its annual car capacity, which stood at 150,000 units late last year.

For more information please visit http://www.gasgoo.com