Narrative
Full Description
Project narrative
Sichuan Development Holding Co., Ltd. (SDH) — the wholly state-owned investment arm of the State-owned Assets Supervision and Administration Commission of Sichuan Provincial Government — entered into a RMB 130 million (£15.5 million GBP) loan facility agreement with Ligeance Aerospace Technology Co., Ltd., a Chinese multinational aviation manufacturer listed on the Shenzhen Stock Exchange — to support the short-term cash needs of Gardner Group Limited, an England and Wales-incorporated wholly-owned subsidiary of Gardner Aerospace Holdings Limited, an England and Wales-incorporated Derby, England-based aerospace component manufacturer wholly-owned by Lianshi Investment Co., Ltd., a Hong Kong-incorporated wholly-owned subsidiary of Ligeance Aerospace Technology. SDH required additional approvals for drawdowns. The proceeds were to cover the 9 million GBP in short-term cash support promised to GGL from January to March 2023 and support other subsidiaries of Ligeance. At the time of the loan, SDH, a significant shareholder in Ligeance, was working on converting its debt into equity in Ligeance, giving it a controlling interest in the company. While the French Government approved that deal in March 2022, the Government of the United Kingdom required governance changes in its October 2022 approval. Specifically, on October 10, 2022, the United Kingdom Secretary of State for Business, Energy and Industrial Strategy made a final order pursuant to section 26 of the National Security and Investment Act 2021, to come into effect the date the acquisition was completed. While the Secretary for State allowed the acquisition, given that the acquisition would give a Chinese state-owned company control over a U.K. aerospace company, it was considered a national security risk in need of mitigation; specifically, it restricted the sharing of information by Gardner Aerospace Holdings Limited and Gardner Group Limited with SDH or Ligeance Aerospace Technology, put security measures in place, removed representatives of SDH and Ligeance Aerospace Technology from the Board of Gardner Aerospace Holdings, required the appointment of a U.K. Government Observer to the Board of Gardner Aerospace Holdings, and required notification of the transfer of assets out of Gardner Aerospace Holdings or Gardner Group to SDH or Ligeance Aerospace Technology. The acquisition was completed on December 28, 2023. On March 13, 2024, the U.K. Secretary of State varied the final order which came into force on March 13, 2024, keeping the conditions and refining the security requirements.