China Yuchai (CYD): Why are investors cheering?

China Yuchai (ticker: CYD), a holding company owning 76% of a Chinese diesel engine manufacturer, is trading up sharply today. Why the rise? Strong auto sales in March? China's push toward adopting more energy efficient diesel engines? No. Take a look at the company's 6-K released earlier today:

....On April 7, 2005, CYI entered into a Reorganization Agreement with Guangxi Yuchai Machinery Company Limited ("Yuchai"), a subsidiary of CYI, and Coomber Investments Limited ("Coomber"), a shareholder of CYI. The terms of this Reorganization Agreement were also acknowledged and agreed to by Guangxi Yuchai Machinery Group Company, a shareholder of Yuchai. The Reorganization Agreement is intended to be in furtherance of the terms of the July 2003 Agreement. The Reorganization Agreement outlines steps regarding the adoption of corporate governance practices at Yuchai and outlines the broad framework for a restructuring of CYI's ownership of Yuchai. Although the parties to the Restructuring Agreement expect to work towards its implementation as expeditiously as possible, no assurance can be given as to when the transactions contemplated therein will be consummated.

Quick thought: Read the more detailed agreement here. Also, take a look at The Fool's recent analysis of China Yuchai's fortunes.

China Yuchai's stock market performance: