News

The Board of Directors of APM Automotive Holdings Berhad (“APM”) wishes to announce that on 29 January 2013, APM, via its wholly-owned investment holding subsidiary, Auto Parts Holdings Sdn. Bhd. (“APH”) entered into a Joint Venture Agreement (“JVA”) with Tachi-S (Thailand) Co., Ltd. (“Tachi-S”) to carry on the business of developing, manufacturing, assembling and sale of automotive seats for original equipment manufacturers in Malaysia.

Information on Joint Venture company (“JV Co”)

A new JV Co will be incorporated under the proposed name of “APM Tachi-S Seating Systems Sdn. Bhd.”. The JV Co will have an authorised share capital of RM5,000,000/- (Ringgit Malaysia : Five Million only) divided into 5,000,000 ordinary shares of RM1/- each.  The initial issued and paid-up share capital of RM3,500,000/- (Ringgit Malaysia: Three Million and Five Hundred Thousand only) will be subscribed by both parties in cash based on the following shareholding proportions:-

APH              - 60% of equity interest or 2,100,000 ordinary shares

Tachi-S         - 40% of equity interest or 1,400,000 ordinary shares

The total capital and investment outlay of APH amounting to RM2,100,000/- (Ringgit Malaysia : Two Million and One Hundred Thousand only) will be financed through internally generated funds.

Information on Tachi-S

Tachi-S (Thailand) Co., Ltd. is a limited liability company incorporated under the laws of Thailand on 14 September 2011 to supervise the operations of the Tachi-S group in India and the ASEAN area. The company has a registered capital of 1 billion Thai Baht divided into 1,000,000 shares of 1,000 Thai Baht each, of which 44.5% has been paid-up. It is a wholly-owned subsidiary of Tachi-S Co., Ltd. of Japan which was first established in 1954 and currently listed in the First Section of the Tokyo Stock Exchange.

The Tachi-S group is a global automotive seat system designer and manufacturer with strong presence in China and North America and making in-roads into Asia in recent years. Among its major customers are Nissan Motor, Honda, Toyota and Mitsubishi.

Rationale, risk factors and prospects involved in undertaking the JV

The automotive seat business has been one of APM’s core businesses in Malaysia for more than 30 years.   The JV between the two (2) car seat makers will enable both parties to leverage on each other’s knowledge and experience to bring about greater synergy in their expertise and know-how in the design, development, manufacture and assembly of car seats.

There are no special risks associated with the JV other than operational risks. 

The future of the automotive industry is poised to grow in the up-coming emerging markets in the ASEAN region.  Upon careful analysis and a thorough feasibility study, the Board believes that the timing of the JV is appropriate to capture the opportunities to expand the seat business.

Management

The 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 JVA, the unanimous approval of the shareholders and of the directors, as the case may be, is required for certain matters.

Duration of the JVA

The JVA is effective from the date of execution unless terminated (i) by any party at any time as a result of transfer of shares made in accordance with this JVA, that party holds no shares in the capital of the JV Co or (ii) on the occurrence of a default by a party such as the commitment of a material breach of its obligations, insolvency, inability to pay its debts among others, which is not resolved within 90 days or (iii) with the consent of the other party.  

License

A manufacturing license under the Industrial Co-ordination Act 1975 to be issued by the Ministry of International Trade and Industry/ Malaysian Industrial Development Authority, Malaysia will be required.

Financial impact

APM’s investment in the JV is expected to generate reasonable returns in the longer term but will have no material effect on the earnings per share, net assets per share, gearing, share capital and substantial shareholders’ shareholding of APM for the financial year ending 31 December 2013.

Directors’ and substantial shareholders’ interests

None of the directors and/or substantial shareholders of APM have any interest, direct or indirect, in the JV.

Directors’ statement

The Directors are of the opinion that the JV is in the best interest of APM.

This announcement is dated 30 January 2013.