WUHAN, China, Dec. 26 /Xinhua-PRNewswire/ -- China Automotive Systems, Inc. , a leading power steering components and systems supplier in China, today announced it has started discussions with Hubei Wanlong Investment Co. ("Hubei") to acquire an additional 36.5% of Henglong Automotive Parts Company ("Henglong"). No binding agreement has been signed yet and the discussion is continuing.
Henglong, currently 44.5% owned by China Automotive Systems, is engaged in manufacturing power steering systems and components for China's rapidly growing passenger vehicle market. Henglong's main customers include Chery Auto, BYD Auto, Geely Auto and FAW Volkswagen. In 2006, Henglong posted sales of USD$54.54 million, representing 57% of China Automotive Systems' total net sales, and net profit of USD$9.75 million, while CAAS' net profit was USD$4.81 million. Upon the completion of the proposed acquisition, China Automotive Systems' ownership in Henglong will increase to 81%.
A special acquisition committee, consisting of three China Automotive Systems' independent directors, has been formed to evaluate and facilitate the final transaction. The special acquisition committee is evaluating appraisal firms and financial advisers to assist it. Management expects the acquisition may be completed in the first quarter of 2008.
Mr. Jie Li, Chief Financial Officer of China Automotive Systems, stated, "We are very pleased to take this step to consolidate our fastest-growing subsidiary to enhance value for our shareholders. Our special acquisition committee continues its discussion with Henglong's minority shareholder as we are working to roll this key minority stake into our public company. This step further demonstrates our commitment to be a power steering leader and participate in the rapid growth of the passenger vehicle market in China."
About CAAS
Based in Hubei Province, 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 seven Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers 4 separate series of power steering and 307 models of power steering with an annual production capacity of 1.1 million sets, steering columns, steering oil pumps and steering hoses. Its customer base is comprised of leading Chinese auto manufacturers such as China FAW Group, Corp., Donfeng Auto Group Co., Ltd., Brilliance China Automotive Holdings Ltd., Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. etc. For more information, please visit: http://www.caasauto.com
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the Company's operations, financial performance and, condition and the impact of this acquisition on its financial performance. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products, pricing and new technology; changes in demand for the Company's products; changes in consumer preferences and tastes; and effectiveness of marketing; changes in laws and regulations; fluctuations in costs of production, delays and cost overruns related to developing and opening new production facilities; and other factors as those discussed in the Company's reports filed with the Securities and Exchange Commission from time to time.
For further information, please contact:
Jie Li
Chief Financial Officer
China Automotive Systems
Email: jieli@chl.com.cn
Kevin Theiss
Investor Relations
The Global Consulting Group
Tel: +1-646-284-9409
Email: ktheiss@hfgcg.com
Stacy Dimakakos
Financial Media Relations
The Global Consulting Group
Tel: +1-646-284-9417
Email: sdimakakos@hfgcg.com