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SOURCE China Automotive Systems, Inc.
WUHAN, China, May 19, 2014 /PRNewswire-FirstCall/ -- China Automotive Systems, Inc. ("CAAS" or the "Company") (NASDAQ: CAAS), a leading power steering components and systems supplier in China, announced today that it has entered into an agreement to acquire a 51.0% equity control position in Fujian Qiaolong Special Purpose Vehicle Co., Ltd. ("Fujian Qiaolong").
Fujian Qiaolong was founded in 1993 and currently produces special emergency vehicles (emergency power source vehicles, heavy flow drainage vehicles, emergency drainage vehicles, etc.) and civil service vehicles (vending vehicles, garbage trucks, medical waste transportation vehicles, etc). Located in Longyan, Fujian Province, almost 200 people including more than 20 technical personnel are employed at Fujian Qiaolong, which has production capacity to modify approximately 4,000 special services vehicles annually. Fujian Qiaolong Special Purpose Vehicle Co. had no affiliation with CAAS prior to the acquisition.
For the 2013 year, Fujian Qiaolong had revenues of approximately RMB 41.6 million with net earnings of about RMB 6.5 million. Registered capital is approximately RMB 20 million with assets totaling RMB 67.5 million as of the end of 2013. The total purchase price is approximately $3.0 million in cash. Upon completion of the acquisition, CAAS will further provide a loan of RMB 30.0 million ($4.8 million) to Fujian Qiaolong at an annual interest rate of 8.5% to further its expansion. The detailed terms of the loan will be negotiated separately. No other terms of the acquisition were disclosed.
Mr. Hanlin Chen, Chairman of China Automotive Systems, commented, "Special service vehicles are a growing segment within the commercial vehicle market, as China continues to move towards greater urbanization. Being the largest power steering producer in China, we have developed relationships with many OEMs and components suppliers over the last two decades. In the past few years, due to our strong cash flows and solid balance sheet, we began researching acquisition opportunities. During our 8-months due diligence, we were impressed with Qiaolong's best-in-class product offerings and ongoing strong growth prospects. Similar to CAAS, Qiaolong is a company with strong product specialization and a long-standing track record. We look forward to developing new growth opportunities as we expand our operations and create greater value for our shareholders."
About China Automotive Systems, Inc.
Based in Hubei Province, the People's Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering components and systems to the Chinese automotive industry, operating through eight Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers four separate series of power steering with an annual production capacity of over 4.0 million sets of steering gears, columns and steering hoses. Its customer base is comprised of leading auto manufacturers, such as China FAW Group, Corp., Dongfeng Auto Group Co., Ltd., BYD Auto Company Limited, Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. in China, and Chrysler N.A. in North America. For more information, please visit: http://www.caasauto.com.
This press release contains statements that are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. These forward-looking statements include statements regarding the qualitative and quantitative effects of the accounting errors, the periods involved, the nature of the Company's review and any anticipated conclusions of the Company or its management and other statements that are not historical facts. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. As a result, the Company's actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the heading "Risk Factors" in the Company's Form 10-K annual report filed with the Securities and Exchange Commission on March 31, 2014, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.
For further information, please contact:
Chief Financial Officer
China Automotive Systems, Inc.
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