FINDLAY, Ohio (Aug. 6, 2009) — China's Chengshan Group has notified Cooper Tire & Rubber Co. it is considering exercising a put option that would require Cooper to buy part of Chengshan's 49-percent share in the companies' Cooper Chengshan (Shandong) Tire Co. Ltd. venture.
Chengshan notified Cooper in early July it was considering this option and that it is awaiting approval from Chinese authorities to go ahead with it, according to Cooper Chairman and CEO Roy Armes in a conference call with analysts.
Cooper has budgeted a minimum of $62.7 million for the entire 49-percent share, but at this time it appears Chengshan would put forward a 14-percent tranche. Cooper estimates this size holding would cost it $18 million, Mr. Armes said.
In connection with its acquisition of Cooper Chengshan in 2006, Cooper accepted a put option that obligates it to buy from Chengshan anytime from Jan. 1, 2009, through Dec. 31, 2011, that firm's minority holding.
Cooper Chengshan operates a factory in Chengshan with 9 million units of annual capacity for passenger, light truck and medium truck tires.