News

Introduction

The Board of Directors of APM Automotive Holdings Berhad (“APM”) wishes to announce that on 12 August 2016, APM via its indirect wholly-owned subsidiary, APM Automotive IndoChina Ltd (“AAIL”) entered into a Joint Venture Agreement (“JVA”) with TACHI-S (Thailand) Co., Ltd (“TACHI-S”), a wholly-owned subsidiary of TACHI-S Co. Ltd. to carry on the business of developing, manufacturing, assembling and sale of automotive seats in Vietnam for the original equipment manufacturers (“OEMs”) and such other business or businesses as the joint venture parties may deem beneficial to the main line of business including the manufacture by the joint venture company of such other new products. The joint venture company will also participate in the joint development of automotive seats for customers requiring seat design development.

Structure of Joint Venture

A new joint venture company (“JV Co”) will be incorporated in the Socialist Republic of Vietnam under the proposed name “APM TACHI-S SEATING SYSTEMS VIETNAM CO., LIMITED” with an investment capital and charter capital of USD2,500,000.00 respectively (USD Two Million and Five Hundred Thousand) which will be contributed by both joint venture parties in cash based on the following ratio:

(i)    AAIL to contribute 49%, being a sum of USD1,225,000.00; and

(ii)    TACHI-S to contribute 51%, being a sum of USD1,275,000.00.

The investment in the JV Co will be financed through internally generated funds.

Information on AAIL

AAIL was incorporated in Labuan Federal Territory on 23 October 2012 as a company limited by shares under the Labuan Companies Act 1990. The issued and paid-up share capital of AAIL is USD12,060,001. AAIL is a wholly-owned investment subsidiary of APM Automotive International Ltd, which in turn is a wholly-owned investment subsidiary of APM.

Information on TACHI-S

TACHI-S 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. TACHI-S has a registered capital of THB1,000,000,000 divided into 1,000,000 shares of THB1,000 each, of which THB771,357,060 has been fully paid-up. It is a wholly-owned subsidiary of TACHI-S Co., Ltd, a company incorporated in Japan.   

TACHI-S is the JV partner with one of the subsidiaries of APM in Malaysia and TACHI-S Group is a global automotive seat system designer and manufacturer.
 
Rationale, risk factors and prospects involved in undertaking the JV

This JV arrangement is in line with the expansion plan of APM Group to increase its market share in markets outside Malaysia. The JV will enable both parties to leverage on each other’s knowledge and experience to bring greater synergy in their expertise and know-how in the design, development, manufacture, assembly and sales of automotive seats.

The JV is expected to contribute positively to the growth of APM Group in the future. There is no special risk associated with the joint venture other than operational risks and risks inherent in the automotive industry in which APM Group is operating.

The automotive industry is poised to grow in the up-coming emerging markets in the ASEAN region. The Board believes that the timing of the JV is appropriate to capture the opportunities to expand our current seat business overseas.

Duration of the JVA

The JVA is effective from the date of execution unless terminated in the following circumstances:

(i)    the issuance of the investment registration certificate and enterprise registration certificate (“Investment Certificates”) does not take place within 6 months of application;

(ii)    the dissolution or winding up of the JV Co;

(iii)    upon expiry of the duration of the relevant project(s) which is no less than 50 years commencing from the date of issue of the relevant Investment Certificates pertaining to the business or any extension thereof;

(iv)     if the relevant authorities issue a decision to withdraw the Investment Certificates;

(v)    transfer or assignment of the capital contribution in the JV Co by all the joint venture parties to a third party or parties;
 
(vi)    mutual consent of the joint venture parties.

Financial Effects of the JV
 
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 2016.

Approvals Required

The JVA is not subject to the approval of the shareholders of APM or any regulatory authorities.

Interest of Major Shareholders and Directors

None of the directors and/or major shareholders of APM and/or persons connected to them have any interest, direct or indirect, in the JVA.

Statement by the Board of Directors

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

This announcement is dated 12 August 2016.