News

Introduction

The Board of Directors of APM Automotive Holdings Berhad (“APM”) wishes to announce that on 28 October 2016, APM via its wholly-owned subsidiary, Auto Parts Holdings Sdn Bhd (Company No. 143315-V)(“APH”) entered into a Joint Venture Agreement (“JVA”) with Delta Kogyo Co., Ltd (Company Registration No. 3240001036479) (“Delta”), to carry on the business of developing, manufacturing, assembling and sale of automobile seating system for automobiles of Mazda Motor Corporation (“Mazda”) including their Mazda CX-5 and generic models or any other car makers and other non-seat products as both APH and Delta may from time to time agree.

Structure of Joint Venture

A new joint venture company (“JV Co”) will be incorporated in Malaysia under the proposed name “APM Delta Seating Systems Sdn Bhd”. The JV Co will have an authorized capital of RM25,000,000.00 (Ringgit Malaysia Twenty Five Million) divided into 25,000,000 ordinary shares of RM1.00 each.  The issued and paid-up share capital of RM23,000,000.00 (Ringgit Malaysia Twenty Three Million)  divided into 23,000,000 ordinary shares of RM1.00 each, will be subscribed by both parties in cash based on the following shareholding proportion:

(a)          APH – 60% equity interest or 13,800,000 ordinary shares of RM1.00 each

(b)          Delta – 40% equity interest or 9,200,000 ordinary shares of RM1.00 each

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

Information on APH

APH was incorporated in Malaysia on 8 August 1985 as a private limited company under the Companies Act, 1965. The authorized share capital of APH is RM20,000,000.00 divided into 5,000,000 ordinary shares of RM1.00 each and 1,500,000,000 redeemable preference shares (“RPS”) of RM0.01 each. The issued and paid up share capital of APH is RM2,650,000.00 divided into 2,500,000 ordinary shares of RM1.00 each and 15,000,000 RPS of RM0.01 each. APH is a wholly-owned investment subsidiary of APM.

Information on Delta

Delta was incorporated in Japan on 2 March 1953. The registered capital of Delta is JPY91,000,000.  

Delta is in the business of designing and manufacturing automotive seating and seating parts, developing seating for trains, airplanes, ships and for homes, theaters and hospitals.  

Rationale, risk factors and prospects involved in undertaking the JV

Delta is one of the technical partners of APM Group in Malaysia.  The JV will enhance and strengthen the relationship with Delta which 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 arrangement creates the opportunity for the JV Co to supply Complete Knock Down seats, seat frames and components into the ASEAN market.  

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.

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.

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 the JVA, such that the 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.  

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 28 October 2016.