Retail

Cooper has a plan for ownership of Chinese plant

Posted on January 31, 2014

Cooper Tire and Rubber Co. has reached an agreement with its Chinese partner and the labor union representing its Chinese employees to resume regular financial reporting and determine the future ownership of its Chinese plant.

The agreement between Cooper, Chengshan Group Co. Ltd. and the CCT labor union begins with engaging an independent valuation firm to determine the fair market value of CCT.

Once a valuation is established:

* Chengshan will have the first option to either purchase Cooper’s 65% interest or to sell its 35% interest to Cooper, making CCT a wholly-owned subsidiary of Cooper;

* if Chengshan determines not to exercise either of these options, Cooper has the right under the agreement to purchase Chengshan’s 35% interest; and

* in the event that neither party elects to purchase the others’ interest, the agreement allows for continuation of the joint venture as currently structured.

“The agreement achieves important near-term goals,” Cooper Chairman, Chief Executive Officer and President Roy Armes told investors in a webcast. “It puts Cooper in a position to resume and sustain regular financial reporting. It resolves the disputes related to CCT. It returns CCT to normal operations on a sustainable basis, and it provides a secure supply of product from CCT to our customers.”

The disputes with CCT included work stoppages, seizure of company property, halting production of Cooper brand tires and refusal to provide operational and financial data to Cooper.

“Longer term, this agreement establishes a path forward and a framework of options to determine the future of ownership of CCT based on a fair market value for the business as determined by an independent valuation firm,” said Armes.

Cooper Vice President, Chief Financial Officer and Treasurer Brad Hughes said the process will begin with engaging an independent valuation firm acceptable to both parties.

The goal is to complete the valuation within 60 days after the firm is selected or Cooper has filed 2013 financials. The company expects to report 3rd quarter results by early March and 4th quarter and full-year earnings by mid to late March.

Once a valuation is set, Chenseng has 45 days to buy Cooper’s 65% stake in CCT and become full owner; sell its 35% stake to Cooper; or decide not to take action. If CCT does not take action, Cooper can buy Chenseng’s 35% stake in CCT.

If neither party buys the other, the joint venture partnership continues under its existing ownership structure.

The agreement sets a floor value of $435 million for the total business. The price of the options will be based on the higher of the floor amount or the value determined by the independent valuation firm.

Armes said the CCT joint venture facility produces ten million PCR and TBR tires annually. Cooper’s Roadmaster TBR tires are manufactured at CCT and sold primarily in the United States and other select geographies.

The webcast did not take live calls. An archive of the webcast will be available for 30 days at http://www.media-server.com/m/p/yp9skj78 or at the company’s investor relations website at http://coopertire.com/investors.aspx.

For recent news on the Cooper see:

Cooper: Chinese partner will provide data

Cooper clarifies production status at China plant

Cooper will pursue damages against Apollo

Related Topics: Brad Hughes, CCT, Chengshan Group Co. Ltd., Cooper Tire and Rubber Co., Roy Armes

Comments ( 0 )
More Stories
News

ZC Rubber Opens R&D Center

Zhongce Rubber Group Co Ltd. (ZC Rubber) has opened a research and development center in China in cooperation with a state-owned research and development institute.

News

Bauer Built Awards $6,000 in Annual Scholarships

Since 1994 Bauer Built Inc. has recognized the children and grandchildren of its employees through the G. F. “Sam” and Ethel V. Bauer/Bauer Built Inc. Scholarship program. Four high school seniors have earned the prize in 2017.

The Bridgestone Europe headquarters in Zaventem.
Article

Bridgestone in Europe! Building on Continued Success

As I am sure all MTD readers can appreciate, Europe is currently in the grip of a number of significant business trading changes including a fluctuating economy and the very real prospect of the UK market eventually leaving the European Union.

Article

Cost Pressures Will Likely Continue to Build

According to the results of our survey, demand for passenger and light truck replacement tires declined in March. Indeed, from a volume standpoint, the dealers reported they sold 0.8% fewer tires in March relative to the previous year’s period. The decline marks the third straight month of poor results versus the prior year’s period. However, on more a positive note, trends improved sequentially.

ATD's new mixing center is delivering tires to 32 distribution centers. The first truck load of tires pulled out of the dock on May 1.
News

New ATD Mixing Center Has Capacity for Almost 1 Million Tires

American Tire Distributors Inc. (ATD) has opened its fourth regional mixing center in the U.S. Large enough to hold nearly 1 million tires, the mixing center in the Dallas/Fort Worth area will replenish the inventories of 32 ATD distribution centers in the Southwest.

TRMG advises selecting the appropriate repair unit, either a one- or two-piece repair, based on repair material manufacturer recommendations. “For injuries with an angle greater than 25 degrees, depending on repair manufacturer, use a two-piece repair unit system.”
Article

LT Tire Repair: TRMG Revises its Recommendations

The Tread Rubber and Tire Repair Materials Manufacturers Group (TRMG) has released additional Recommended Practices (RPs) for retreading and repairing through the Tire Retread & Repair Information Bureau (TRIB) website. The RPs are free to view on TRIB’s website, www.retread.org.

Be the First to Know

Get the latest news and most popular articles from MTD delivered straight to your inbox. Stay on top of the tire industry and don't miss a thing!