BYD shares sale tumble

BYD Co., the Chinese automaker partially owned by Warren Buffett's Berkshire Hathaway Inc. (BRK/A), plans to sell new shares equivalent to as much as 20 percent of its Hong Kong-traded stock, said two people with knowledge of the matter. The shares fell the most in almost six months.

BYD hired Deutsche Bank AG and UBS AG to arrange the sale and the company's board may approve the plan next week, said one of the people, who asked not to be identified because the proposal hasn't been made public. Based on today's close, the sale would be worth as much as HK$3.85 billion ($496 million), according to data Veronica Jiang, a Shenzhen-based BYD spokeswoman, said the company doesn't currently have plans to issue new shares and declined to elaborate.

BYD's profit in 2012 probably fell 94 percent to the lowest since 1999, based on preliminary company estimates, as it faced increasing competition in its battery business. The stock, which in 2009 traded at as high as HK$85.50 in Hong Kong, has tumbled more than 70 percent since then.

Today, the shares fell 7.8 percent to HK$24.25 in Hong Kong trading, the biggest decline since Sept. 26. The automaker's stock has doubled since July as China said it will encourage the use of alternative-energy vehicles to cut pollution and fuel consumption.

BYD's vehicle sales fell 18 percent to 77,004 units in the third quarter. In the first nine months of last year, BYD received 371.1 million yuan ($60 million) in government subsidies for research and development and energy-saving automobiles, helping it earn 20.8 million yuan in net income, according to a filing to the Hong Kong exchange. The company sold 3 billion yuan of five-year bonds in June 2012.

China Development Bank agreed last year to provide financing to buyers of BYD's electric buses and taxis so that they need no down payment if the purchases are for public transportation.

BYD won approval in January from the European Union to sell its electric buses in all member states without the need for individual national permission. In December, the automaker had agreed to set up a joint venture with Bulmineral Ltd. to produce electric buses in Bulgaria. The automaker also has a joint venture with Daimler AG to produce a newenergy vehicle.