Commercial Business

GPX sells its Serbian factory to CGS Group

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GPX International Tire Corp. has reached an agreement to sell its Rumaguma tire manufacturing facility in Serbia to the Czech Republic-based CGS (Ceska Gumarenska Spolecnost) Group.


The transaction is expected to close in the second half of September 2008, pending approval by the Serbian anti-trust authorities.


According to GPX, the companies "are exploring other areas of possible cooperation" as well.


GPX purchased the Rumaguma plant from the Serbian government in 2003 as part of a far-reaching privatization program being undertaken by the Serbian government at that time. CGS is currently the plant's largest customer.


The decision to sell Rumaguma was not an easy one, according to the company. It was GPX's first wholly owned manufacturing facility.


"However, with the recent decision by the U.S. International Trade

Commission to impose punitive duties on agricultural and OTR tires from China, GPX must shift the focus of its Starbright factory in China from the U.S. to Europe," said the company in an official statement. "This means that much of what is currently being produced in Rumaguma will be moved to Starbright.


"The Starbright factory, which GPX purchased in 2006, is a large and modern facility, and can easily absorb Rumaguma's production. In addition, Starbright can produce a broader range of products, including radial farms tires, forestry tires, port tires and underground mining tires."


Along with the sale of the Rumaguma plant, GPX agreed to transfer its Galaxy brand business in parts of Eastern and Central Europe to CGS.


GPX will continue to have Galaxy brand tires produced at Rumaguma for some period of time under an off-take agreement with CGS. This will allow GPX "to be able to continue to support its original

equipment and aftermarket customers without any risk of a supply interruption."


CGS is one of the leading producers of agricultural tires in Europe. It sells under the Continental and Semperit brand names (for more information, see "CGS acquisition of Conti ag tire program goes through," Oct. 14, 2004).

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