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
Article

Despite Lackluster Results, Dealers Still Speculate Volumes Will Increase Going Forward

According to the results of our survey, demand for passenger and light truck replacement tires declined again in April. Indeed, from a volume standpoint, the dealers reported they sold 0.9% fewer tires in April relative to the previous year’s period. The soft results marked the fourth straight month of lackluster results, including three consecutive months of negative volumes. The weak results come despite weather patterns and the disbursement of tax refunds normalizing.

The tall ceilings of Jeff Hall's Gardiners Road store give it a modern look and feel.
News

The Secret to Success for Midas in Canada: Tires

The owner of the two busiest Midas locations in Canada says offering an extensive tire inventory and more than a dozen tire brands has transformed his business. Consider Jeff Hall’s success a sign of what’s to come at Midas stores across North America.  

News

Six Hankook Tire Dealers Will Host Events for Veterans

Six tire dealers will help Hankook Tire America Corp. continue its partnership with the Disabled American Veterans (DAV) organization. Those dealers will host the group's Mobile Service Offices (MSO) at their stores so the DAV can reach out to veterans in those communities.  

Joe Venezia will lead Bridgestone's retail efforts at its 2,200-plus company-owned stores.
News

Bridgestone Retail Stores Have a New Leader

The 2,200-plus retail stores owned and operated by Bridgestone Americas Inc. have a new leader. Joe Venezia is the president of Bridgestone Retail Operations LLC (BSRO) effective June 19, 2017.  

News

Giti's Made-in-USA Tires Earn Fitment on Volkswagen Passat

Two sizes of the All Season Giti ComfortA1 tire will be featured as original equipment tires on the 2019 Volkswagen Passat. Giti Tire (USA) Ltd. says the tires represent the first OE fitment that will be manufactured at the company's U.S. tire plant.

News

Texas Governor Vetoes Used Tire Bill

Texas Gov. Greg Abbott has vetoed a bill that would prohibit the sale of unsafe used tires. "Texas does not need to impose new criminal penalties on people who put tires on cars.

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!