HUBEI, China, Oct. 28, 2004 (PRIMEZONE) -- China Automotive Systems Inc. (Nasdaq:CAAS) today announced the signing of an equity exchange agreement whereby its equity interest in a non-core joint venture business has been exchanged for an equity interest position owned by an investment firm in one of the company's four automotive product joint ventures.
The agreement, subject to approval from appropriate PRC authorities, will now enable management to completely focus on its core steering and automotive components business.
Under the terms of the agreement, the 51 percent equity interest in Jingzhou Henglong Fulida Textile Co. Ltd. owned by Great Genesis Holdings Limited, a wholly owned subsidiary of China Automotive Systems, will be exchanged for the 2.5 percent equity interest in Jingzhou Henglong Automotive Parts Manufacturing Co. Ltd owned by Hubei Wanlong Investment Co. Ltd., a People's Republic of China incorporated company. As a result of the transaction, China Automotive will increase its joint venture ownership position in Jingzhou Henglong to 44.5 percent. In addition to the exchange of ownership interests by both respective parties, Great Genesis has agreed to pay, within 30 days, approximately $90,000 to Hubei Wanlong as further consideration for the value difference between the automotive and textile businesses.
The company said an independent appraisal company recently valued the textile business at approximately $2.34 million and China Automotive Systems' 51 percent equity interest at $1.19 million, equal to a 2.32 equity interest in Henglong Automotive Parts.
Additional information on the equity exchange agreement is available in the company's Form 8-K filing with the Securities and Exchange Commission.
ABOUT THE COMPANY
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 four Sino-foreign joint ventures.
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. 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 consumer preferences and tastes; and effectiveness of marketing; changes in laws and regulations; fluctuations in costs of production, and other factors as those discussed in the Company's reports filed with the Securities and Exchange Commission from time to time.