China Automotive Systems Announces Sale of Zhejiang Steering Pump Business
WUHAN, China, May 23, 2012 /PRNewswire-Asia-FirstCall/ — China Automotive Systems, Inc. (“CAAS“ or the “Company“) (NASDAQ: CAAS), a leading power steering components and systems supplier in China, today announced that its wholly owned subsidiary, Great Genesis Holdings Limited (“Great Genesis”), has entered into a definitive agreement (“Agreement”) to sell its equity interest in Zhejiang Henglong & Vie Pump-Manu Co., Ltd. (“Zhejiang”), to the Zhejiang Vie Group (“Vie Group”), Great Genesis’s joint venture partner in Zhejiang. This transaction is subject to local regulatory authority approval.
Founded in 2002, Zhejiang, which designs, manufactures and markets power steering pumps, is located in Zhuji City, Zhejiang Province. According to the Agreement, Great Genesis will sell its 51% stake in Zhejiang to Vie Group for RMB52 million, which represents a 24% premium as compared to the May 20, 2012 estimated net book value of approximately RMB42 million. According to unaudited accounting information, Zhejiang’s net sales for the first quarter of 2012 declined by approximately 25%, as compared to the same fiscal quarter of 2011, mainly due to lower sales volume. Zhejiang generated approximately $34,000 in net income during three-month period ended March 31, 2012.
Mr. Hanlin Chen, chairman of CAAS’s board of directors, commented, “With the sale of the Zhejiang pump business we are a more focused company, with our core business in power steering gears and new technologies such as our electric power steering systems. We wish Zhejiang well, as we better align CAAS’s businesses for the future.”
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 nine 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 3.5 million sets, steering columns and steering hoses. Its customer base is comprised of leading Chinese auto manufacturers, such as China FAW Group, Corp., Dongfeng Auto Group Co., Ltd., BYD Auto Company Limited, Beiqi Foton Motor Co., Ltd., Chery Automobile Co., Ltd. and Chrysler North America, outside of North America.
Forward Looking Statements
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 9, 2012, 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 more information, please visit: http://www.caasauto.com or contact:
Chief Financial Officer
China Automotive Systems, Inc.
SOURCE China Automotive Systems, Inc.