FINDLAY, Ohio (Aug. 15, 2014) —Cooper Tire & Rubber Co. and Chengshan Group Co. Ltd. have agreed to terms covering a previously announced put-and-call process to resolve the ownership of their Cooper Chengshan (Shandong) Tire Co. Ltd. (CCT) joint venture.
The parties also agreed to extend the the option commencement deadline — the deadline for the independent valuation firm to deliver its fair market valuation of CCT — to Aug. 24, two weeks later than originally envisioned.
“Resolving the future ownership of CCT has remained a priority for our organization as we continue to move forward with our growth plans for China,” said Cooper Chairman, Chief Executive Officer and President Roy Armes.
“Today’s announcement is another step in that process. As we have previously stated, Cooper is confident in our growth plans for China regardless of who owns CCT in the future.”
The being announced today follows on an agreement Cooper, Chengshan Group and labor unions at CCT signed Jan. 29.
The process for determining the ownership of CCT begins with an independent valuation of the joint venture’s fair market value, Cooper said.
Once the valuation is delivered, Chengshan Group has the first option, within 45 days, to elect to purchase Cooper’s 65-percent interest, to sell its 35-percent interest to Cooper or not to exercise either of these options.
If Chengshan determines not to exercise either of the options, Cooper said it then has the right to purchase Chengshan’s 35-percent interest.
In the event that neither party elects to purchase the others’ interest, the joint venture continues as currently structured, Cooper said.
Further, should Chengshan purchase Cooper’s stake in the joint venture, Cooper said it will continue to have offtake rights with CCT agreeing to produce Cooper-brand products, including truck and bus radial tires, for a minimum of three years.
The need for this agreement arose out of problems that surfaced with CCT last year during Cooper’s merger negotiations with India’s Apollo Tyres Ltd. Workers at CCT refused to make Cooper-brand products for several months in protest.
Although CCT halted production in the last half of 2013 and the beginning of 2014, the venture earlier this year returned “to normal production levels,” Mr. Armes said recently.
That change included CCT’s resuming production of Roadmaster-brand truck tires earlier this year and production of all brands is ongoing, with the plant now nearly at full production levels.
Cooper has been majority owner of CCT since early 2006, paying $70 million at that time for a 51-percent stake in what then were two separate ventures — Cooper Chengshan (Shandong) Passenger Tire Co. Ltd. and Cooper Chengshan (Shandong) Truck Tire Co. Ltd.
The deal included a 25-percent stake in a steel cord factory located adjacent to Shandong Chengshan’s plant in Rongchen City, which Cooper later divested.
Cooper boosted its stake in CCT to 65 percent in 2010 at Chengshan Group’s request, paying approximately $18 million for the additional 14-percent share.
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21% (20 votes)
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26% (24 votes)
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22% (21 votes)
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15% (14 votes)
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16% (15 votes)
|Total votes: 94|