Date: Thursday 9th November 2006
MANGANESE BRONZE SIGNS LEGALLY BINDING AGREEMENTS
WITH GEELY AUTOMOBILE HOLDINGS LIMITED FOR CHINESE JOINT VENTURE – INCREASED STAKE AND MULTI VEHICLE OPERATION
Summary and Changes from Heads of Terms
• Definitive legal agreements now signed
• Joint venture in Shanghai will produce 4 vehicles including the London Taxi
• Manganese Bronze increases its share of the joint venture to 48%
Manganese Bronze Holdings PLC is pleased to announce that it has signed legally binding agreements with Chinese car manufacturer Geely Automobile Holdings Limited (a Public Company registered in Hong Kong with Company No. 0175 “Geely”) and Shanghai Maple, an associate of Geely, to hold equity in a joint venture company, Shanghai LTI Automobile Ltd. (Shanghai LTI). This venture will be based in Shanghai and will produce four different vehicles : the iconic London Taxi, a limousine variant of the London Taxi and two additional large saloon cars.
Total investment in the joint venture is forecast at £53 million which will be invested in press tools, body-in-white facilities and assembly operations. Geely will invest a further £33 million in purchasing land and constructing buildings including paint facilities. These facilities will be leased to the joint venture.
The total investment in the joint venture of £53 million will be funded from shareholders equity of £29 million and bank loans of £24 million. Manganese Bronze will satisfy its 48% share of the joint venture by issuing 5.7 million new ordinary shares to Geely (representing just over 23% of Manganese Bronze’s enlarged issued ordinary share capital) based on a valuation of £2.50 a share (with £14 million being invested by Geely in the joint venture). Geely and Maple will respectively own 51% and 1% of the joint venture and will fund the balance of the shareholders equity of £15 million. Manganese Bronze will license its intellectual property to the joint venture. The joint venture agreement will be subject to regulatory approval in China, and this transaction will require approval by Manganese Bronze shareholders at an Extraordinary General Meeting which is expected to take place in December 2006. This transaction will constitute a Class 1 transaction and a circular will be sent out in due course. Geely will also require shareholder approval.
Final assembly and sales of the iconic London Taxi, the limousine and the two saloon cars will be undertaken by Shanghai Maple which will have the right to sell the London Taxi within Asia, while Manganese Bronze will have the right to sell the London Taxi in the Rest of the World. In addition, Shanghai Maple will have the right to sell the limousine and two saloon cars globally with the exception of the United Kingdom, which Manganese Bronze will have exclusive rights to.
LTI (a wholly owned subsidiary of Manganese Bronze), will utilise the skills of its Coventry business to support the establishment of manufacturing in Shanghai, support quality initiatives in Shanghai LTI and assist Maple and Geely in selling vehicles globally.
The intended capacity of Shanghai LTI facility will be 40,000 vehicles with a single shift, with production planned to commence in mid 2008 subject to regulatory approval in China and shareholder approvals. The cost of producing the London taxi is expected to be significantly lower due to higher volumes and purchase of components from Geely’s current suppliers. Shanghai LTI will provide Manganese Bronze with a low cost manufacturing base which should increase appeal to new markets outside China and allow rapid access to the large and fast growing Chinese vehicle market.
Tim Melville-Ross Chairman of Manganese Bronze, said;
“We are delighted to have finalised the agreements which allow Manganese Bronze a greater share in an expanded joint venture which will produce four vehicles including the London Taxi. Manganese Bronze will now become a multi vehicle manufacturer and distributor. Geely is one of the fastest growing car companies in China, with impressive manufacturing, supply chain, engine and dealership facilities. The joint venture will increase the appeal of our iconic vehicle around the world.”
Chairman Li Shufu of Geely, said;
“We are very pleased to have signed these legally definitive agreements with Manganese Bronze. Geely is delighted to be able to participate in this multiple vehicle joint venture. We look forward to being able to produce a low cost London Taxi which will make a global icon truly global and allow people in the rest of world to benefit from the unique features of London Taxi.
For further information:
Manganese Bronze Holdings plc
Mark Fryer, Group Finance and Business Development Director 07866 537903
Financial Dynamics
Jon Simmons
James Ottignon 020 7831 3113
Notes for Editors:
The Heads of Terms signed on Wednesday 4th October, 2006 with Zhejiang Geely Holding Group Co. Ltd, a wholly owned company of Mr. Li Shufu, Chairman and 60.3% shareholder in Geely Automobile Holdings Ltd (“Geely”). The remaining 39.7% of Geely is held by the public on the Hong Kong Stock Exchange (Company No. 0175).
For further details on Geely please see
www.geelyauto.com.uk and
www.geely.com.
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