ZAP Acquires Majority Stake in China’s Jonway Auto
SANTA ROSA, Calif. and ZHEJIANG, China, July 8 /PRNewswire-FirstCall/ –
Agreement is US$29 Million in Cash for 51 Percent
Commercial Agreement for 31.5 M Shares Valued at US$31.5M
Debt-Free Jonway Boosts ZAP’s Shareholder Value
ISO 9000 Certified Modern Factory
ZAP Jonway – a New International Automobile Company with Extensive EV Experience
141 Acres, 3.6 Million Sq. Feet Factory Opened in 2009, Capacity of 30,000 Vehicles per Year
Jonway 2009: US$40 Million Annual Revenues; Jonway Q1 2010: US$20 Million Revenues
850 Employees Quality, Technology Focused
80 Factory-Direct and Hundreds of Factory Authorized Dealers in China
China Auto Manufacturer Meets EU Standards
ZAP Jonway EV is Exclusive Provider of EVs for the U.S. Pavilion at Shanghai Expo (World Fair)
ZAP (OTC Bulletin Board: ZAAP) and Jonway Group today announced they have signed definitive agreements according to which ZAP will acquire 51 percent of Zhejiang Jonway Automobile Co. Ltd. as part of a strategy to capitalize on the growing automotive and electric vehicle (EV) market in China. ZAP is a 15-year-old California EV company and Jonway Auto is a wholly owned subsidiary of Jonway Group, a 20-year-old Chinese vehicle manufacturer. According to the terms of the definitive agreements, ZAP will acquire 51% of Jonway Auto for US$29.03 million in cash. In addition, ZAP will acquire exclusive international distribution rights to Jonway’s automobiles for approximately 31.5 million shares of ZAP’s common stock (valued for purposes of the transaction at US$1 per share). The boards of directors for ZAP and Jonway Auto approved and signed the merger agreement on July 2, 2010.
Jonway Auto reported annual revenues of approximately US$40 million in 2009 and approximately US$20 million for the first quarter of 2010. According to the terms of the transaction, Jonway Auto will be debt-free upon the closing of the transaction.
According to the terms of the definitive agreements, ZAP has the right to acquire the remaining 49% of Jonway Auto at the same valuation by March 30, 2011 or at a then current valuation after that date. ZAP and Jonway intend this transaction to be phase one of a two-phase acquisition, whereby the two companies will combine their complementary expertise, leveraging ZAP’s EV technology and Jonway Auto’s quality ISO 9000 certified mass production capabilities to address the new alternative energy vehicle market. ZAP intends to acquire the remaining 49 percent of Jonway Automobile following completion of the first phase and following final regulatory approval.
The ZAP Jonway merger accelerates cost-effective manufacturing of ZAP’s electric vehicles and gives ZAP access to the Chinese market through Jonway’s distribution channels of more than 80 factory direct dealerships that feed into hundreds of factory authorized dealers. Jonway’s volume manufacturing capacity gives ZAP a strong manufacturing base with the means of commercializing its innovative EV technologies.
“By combining ZAP’s experienced team of EV engineers with Jonway’s manufacturing capabilities, the combined ZAP Jonway will be able to scale up with the fast-growing worldwide market for affordable electric and fuel-efficient vehicles,” said Steve Schneider, CEO of ZAP Jonway. “The new entity will leverage ZAP’s extensive intellectual property and international market access with Jonway’s current China distribution channels and revenue base, for enhanced shareholder value. The new company creates an integrated worldwide sales and manufacturing operation.”
According to Dr. Priscilla Lu, ZAP Board Chair: “As originally planned when I joined ZAP in connection with the Cathaya Funds’ investment in the company, the Jonway transaction was formulated to give ZAP the complementary facilities and automotive manufacturing expertise to position itself as a worldwide EV and automobile manufacturer. Jonway’s management continues to lead and expand its product line of traditional vehicles and will begin to build the production line for ZAP’s EVs in the coming quarters. ZAP will enhance its operations management team to focus on delivering the opportunities at hand.”
Jonway Automobile, with approximately 800 employees, is currently manufacturing approximately 1,000 vehicles per month and has a capacity to produce up to 30,000 vehicles per year at its modern, 3.6 million square foot plant in Sanmen on approximately 141 acres of land. Focused on quality, Jonway is ISO 9000 and China Compulsory Certification (CCC) certified. Jonway distributes through a nationwide network of auto dealerships in China and distribution partners in Europe and Egypt. Jonway’s 3-door SUV has been CE approved in Italy by its European partner for the European market.
“ZAP’s engineering enables us to expand into the EV market and position our company to be one of the leaders in China’s EV market,” said Alex Wang, CEO of Jonway Automobile. “The ZAP team also brings us international market access and automotive distribution channels for the new models that we are designing, and ZAP will help us meet the required international standards for these new markets.”
Earlier this year, ZAP integrated electric drive systems into several Jonway vehicles through its joint venture ZAP Hangzhou. These vehicles are now being showcased and used as electric taxis at the Shanghai Expo. Jonway has also agreed to produce the ZAP Alias electric car, which is now one of the remaining 15 finalists in the Progressive Insurance Automotive X PRIZE competition. ZAP is also one of the five companies selected by the United States Postal Service to engineer and retrofit a gas powered delivery van with a 100 percent electric power train.
Dr. Priscilla Lu added, “The new ZAP Jonway combined company enhances the complementary strengths of each, and uniquely positions the company in the EV market. Jonway Automobile has quality mass production manufacturing as well as access to the Chinese automobile market. ZAP can now apply its in-depth experience in EV technologies and engineering integration know-how to produce a new line of EV models for Jonway Automobile and provide access to worldwide international distribution channels. Jonway, with physical asset value assessed at around US$60 million in land, buildings and modern manufacturing facilities, is cash flow positive, debt-free, has growing revenues, and offers shareholder value for ZAP. ZAP Jonway has now become a significant automotive manufacturer/distributor worldwide”.
ZAP is one of the world’s oldest and most experienced electric vehicle providers, having delivered over 117,000 of a broad range of electric vehicles to more than 75 countries since 1994. ZAP supplies electric trucks and vans to military, government and corporate fleets and is an innovator of electric motorcycles, scooters and ATVs. The Santa Rosa, California based company offers some of the only electric city-speed cars and trucks in production today and is leveraging its accrued technology know-how in developing a cost effective high-speed electric car called the ZAP Alias. Further information is available at http://www.zapworld.com.
Safe Harbor Statement
This press release contains forward-looking statements. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, continued acceptance of ZAP’s products, increased levels of competition, new products and technological changes, ZAP’s dependence upon third-party suppliers, intellectual property rights and other risks detailed from time to time in the ZAP’s periodic reports filed with the Securities and Exchange Commission.