- Funding and Acquisition Positions China Automotive Systems for Further
Growth
WUHAN, Hubei, China, April 21 /Xinhua-PRNewswire-FirstCall/ -- China Automotive Systems, Inc. (Nasdaq: CAAS), ("Company") a leading power steering components and systems supplier in China, today announced that it has received all the $35 million from a previously announced private placement transaction with Lehman Brothers (“Lehman”) for $30 million and with YA Global Investments, L.P., which is managed by Yorkville Advisors, LLC, for $5 million. The proceeds are planned to support the Company’s acquisitions, capital expenditures for expansion and working capital for future growth.
The Company also announced that the previously announced acquisition of an additional 35.5% of Henglong Automotive Parts Company ("Henglong") was approved by the local Ministry of Commerce of the People’s Republic of China in Jingzhou, Hubei Province, China. With this transaction completed, China Automotive Systems now owns 80% of Henglong, and this transaction will be accretive to net earnings in 2008.
Mr. Jie Li, Chief Financial Officer of China Automotive Systems, commented, “The completion of these two transactions are a milestone in helping the Company achieve its near-term strategic goals of improving net margin and continuing production expansion to fuel rising demand from mid- to high-end OEMs. We are immediately putting these new funds to use to help build shareholder value and the new equity interest in Henglong provides substantial sales, net earnings and cash flow to China Automotive Systems. We are also aggressively targeting the export market as the quality of our products has received interests from large foreign OEMs.”
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, the impact of this higher equity interest, and the impact of the 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
Email: jieli@chl.com.cn
Kevin Theiss
Investor Relations
The Global Consulting Group
Tel: +1-646-284-9409
Email: ktheiss@hfgcg.com