China Automotive Systems Announces $35 Million Private Placement of Notes and Warrants

2008-02-04 18:38 932

-- Net Proceeds Expected to Accelerate Acquisitions and Expand Production Capacity --

WUHAN, Hubei, China, Feb. 4 /Xinhua-PRNewswire/ -- China Automotive Systems, Inc. (Nasdaq: CAAS), a leading power steering components and systems supplier in China, today announced that it has signed a Securities Purchase Agreement with two institutional investors. The institutional investors will purchase Senior Convertible Notes with an original principal amount of $35 million, plus warrants. The $35,000,000 of proceeds, plus any future proceeds from the exercise of the warrants, are planned to support the Company's acquisitions, capital expenditures for expansion and working capital for future growth. The private placement is expected to close on February 13, 2008.

Subject to earlier redemption in certain circumstances, the Senior Convertible Notes will mature in five years and will be initially convertible into 3,953,596 shares of Common Stock at $8.8527 per share, and the 1-year warrants will be exercisable for an aggregate of 1,317,865 shares of Common Stock at an initial exercise price of $8.8527 per share. The Notes will be unsecured and will bear interest at an annual rate increasing over time from 3% to 5%; if the Notes are repaid or redeemed rather than being converted the Company must make an additional make-whole payment which, together with interest already paid, will equate to gross interest of up to 13%. The Notes' conversion price will be subject to reset every 6 months under certain terms but subject to a $7.0822 floor.

Mr. Qizhou Wu, Chief Executive Officer of China Automotive Systems, stated, "This private placement will provide the financing to accelerate our acquisition program and purchase additional equipment to expand our production capacity. We are experiencing growing demand for our power steering products and systems as we already supply over 50 automotive manufacturers in China and started receiving more and more inquiries from overseas. Additionally, these funds will help us strengthen our North America operation and develop the next-generation steering products which will help propel our plan to become a global supplier to major automobile manufacturers."

Mr. Jie Li, Chief Financial Officer of China Automotive Systems, commented,"We

are very excited to receive funding from highly-regarded investment groups as cornerstone investors. Our growth strategy, proven record, strong execution and commitment from the management team boost our investors' confidence in participating in our quest to expand in the power steering market. We look forward to fully utilizing the fresh capital to extend our leadership in China and broaden our global market coverage."

The underlying shares of common stock associated with the private placement have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission (the "SEC") or an applicable exemption from the registration requirements. China Automotive has agreed to file a registration statement with the SEC covering resales of any shares of common stock issued upon the conversion of Notes and/or upon any exercise of Warrants.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

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: .

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 financing on acquisitions, the purchase of production equipment, and on 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; 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; the need to repay the Senior Convertible Notes (at maturity or, in certain circumstances, upon earlier redemption) if they are not converted into Common Stock; and other factors as 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


Kevin Theiss

Investor Relations

The Global Consulting Group

Tel: +1-646-284-9409


Source: China Automotive Systems, Inc.
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Keywords: Auto