News

Introduction

On 1 November 2011 APM Automotive Holdings Berhad (“APM”) , via its wholly-owned investment holding subsidiaries, Auto Parts Holdings Sdn. Bhd. (“APH”) and APM Automotive International Ltd. (“APMAI”), entered into two separate joint-venture agreements (individually “JVA” and collectively “JVAs”) with subsidiaries of International Automotive Components Group SA (“IAC Group”) to carry on the business of manufacturing and sale of automotive interior plastic components and systems to the domestic and multinational original equipment manufacturers (OEMs) in Malaysia and Thailand respectively.

Information on joint-venture companies (“JV Cos”)

In Malaysia, a new joint-venture company will be incorporated under the name of “APM IAC Automotive Systems Sdn Bhd”. It will have an authorized share capital of RM 48 million divided into 16,000,000 ordinary shares of par value RM 3.00 each. The initial issued and paid-up share capital of RM 1.5 million will be subscribed for in cash. Each party’s shareholding will be as follows:

APH -60% of equity or 300,000 ordinary shares

IACG Holdings Lux S.a.r.l. (“IACG”) -40% of equity or 200,000 ordinary shares

The total capital and investment outlay of APH will be RM 28.80 million, which will be financed by internal funds.

Under the Thai JVA, the new company in Thailand will be formed under the proposed name of “IAC APM Automotive Systems Ltd”. The registered capital of Baht 102 million divided into 3,400,000 ordinary shares of par value Baht 30.00 each will be subscribed for in cash and issued as partly paid up shares initially. The initial paid up capital is 25% of the registered capital totalling Baht 25.5 million. The shareholdings of the parties will be as follows:

APMAI -40.00% of equity or 1,360,000 ordinary shares

IACG -59.99% of equity or 2,039,660 ordinary shares

IACG Holdings II Lux S.a.r.l (“IACGII”) -0.01% of equity or 340 ordinary shares

The total investment outlay of APMAI for the Thai joint-venture of Baht 40,800,000 or approximately USD 1.33 million will be funded internally.

Information on IACG and IACGII

Both IACG and IACGII are limited liability companies incorporated under the laws of Luxembourg. IACG is a wholly- owned subsidiary of IAC Group while IACGII is a wholly-owned subsidiary of IACG.

IAC Group, with its headquarters in Luxembourg, is a leading global supplier of automotive components and systems, including interior and exterior trim. It operates 75 manufacturing facilities in 16 countries and employs approximately 22,000 people around the world.

Rationale, risks factors and prospects involved in undertaking the ventures

The automotive interior plastic business has been one of APM’s core businesses in Malaysia for more than 25 years. Through the joint ventures, two experienced vehicle interior suppliers will be able to leverage on their knowledge and experience to bring about greater synergy in their expertise and know-how in the design, manufacture and supply of interior plastic components and systems, including instrument panels, door panels, floor consoles, interior trim, overhead systems shelves, acoustics, package shelves and bumpers. The collaboration with IAC Group in Thailand is also part of APM’s regional expansion plan to extend its geographical footprint in the ASEAN countries as the Group already has auto parts manufacturing operations in Indonesia and Vietnam.

There are no special risks associated with both joint-ventures other than operational risks.

The future of the automotive industry is poised to grow in the up-coming emerging markets in the ASEAN region. After careful analysis and a thorough feasibility study, we believe that it is the right time to set up the joint-ventures with the IAC Group to work together in mutual support of some key OEM programmes and to capture the opportunities ahead.

Management

Each JV Co will be managed by a separate Board of Directors. The directors are appointed by the shareholders in proportion to their respective shareholdings. Under the JVAs, the unanimous approval of the shareholders and of the directors, as the case may be, is required for certain matters.

The JVAs are effective from the date of execution until terminated by the agreement of the shareholders, or by the sale of all or substantially all of the assets of the JV Cos, or by the sale of all the shares of the shareholders other than sale to affiliates, or by virtue of breach of a material provision thereof or by virtue of liquidation proceedings being brought against a shareholder or the JV Co or following the occurrence of a force majeure event.

Licenses

A manufacturing license to be issued by the Ministry of International Trade and Industry, Malaysia will be required for the operation in Malaysia. An application will be made to the Board of Investment in Thailand for the joint-venture to conduct the business as a majority foreign owned corporation in Thailand, and thereafter, for a Foreign Business Certificate to be issued by the Ministry of Commerce, Thailand.

Financial impact

APM’s investments in the joint-ventures are expected to produce reasonable returns for the Group in the longer term but will have no material effect on the earnings and net tangible assets of the Group for the financial year-ending 31 December 2011.

Directors’ and substantial shareholders’ interests

None of the directors and substantial shareholders of APM have any interest, direct or indirect, in the joint-ventures.

Directors’ statement

The Directors are of the opinion that the joint-ventures are in the interest of APM.

Duration of JVAs