Narrative
Full Description
Project narrative
On December 11, 2013, Zhuzhou Times New Material Technology Co., Ltd. (TMT) — a Zhuzhou, Hunan Province-based Chinese state-owned rubber and plastic products manufacturing company part of CSR Corporation Limited listed on the Shanghai Stock Exchange — entered into a sale and purchase agreement with ZF Friedrichshafen AG (a German manufacturer of automotive components) to acquire the assets of BOGE, ZF's Rubber & Plastics business unit, for €290,000,000 EUR ($399.3 million USD) in cash. To support the acquisition, in 2013, the Hunan Branch of the Export-Import Bank of China issued a revocable commitment letter to TMT for the provision of loans not exceeding 70% of the €290 million EUR consideration. CSR Corporation Limited planned to enter into relevant guarantee contracts with China Eximbank for the provision of joint and several liability guarantees for the loans. The remaining 30% of the funding was committed by CSR Corporation via capital injection or a shareholder loan. TMT acquired to purchase the complete Rubber & Plastics business unit, also known as BOGE, excluding its oil pans and components-related and organic sheet technology activities. Specifically, TMT acquired to acquire all the assets of relevant businesses of BOGE Germany (the assets of ZF's Rubber & Plastics business unit held by ZF Group, including the management headquarters of BOGE and three non-independent-legal entity factories), a 99.9955% equity interest in ZF Boge Elastmetall France S.A.S., a 100% equity interest in ZF Rubber & Plastics Hebron, LLC (with a carve-out of its oil pan and organic sheet businesses), a 100% equity interest in ZF Boge Elastmetall Slovakia a.s. (with a carve-out of its oil pan and organic sheet businesses), a 100% equity interest in ZF Boge Elastmetall Australia Pty Ltd., a 99.98% equity interest in Sorocaba Metal-Borracha e Plásticos S.A., and a 100% equity interest in ZF Boge Elastmetall (Shanghai) Co., Ltd. TMT established special purpose vehicle (SPV) CSR Rubber & Plastics (Germany) GmbH to specifically acquire the BOGE assets. At the time of the acquisition, the Rubber & Plastics business unit was part of ZF's Car Chassis Technology division and was responsible for the development and production of vibration control and suspension systems for chassis and drive line and plastic components, plastic pedal modules, and crash absorption systems for automobiles. It generated approximately $962.7 million USD in sales. The Rubber & Plastic business unit had about 3,300 employees across nine locations in Europe (including in Simmern, Germany), North America (including in Hebron, Kentucky, the United States), South America, Asia (including in Qingpu, China), and Australia. According to Morgan Stanley, BOGE was losing money everywhere except the United States and China. TMT planned to use BOGE as its primary automotive platform globally. The acquisition was expected to close in the first half of 2014, subject to TMT shareholder and Chinese and European regulatory approvals. The acquisition was completed on September 1, 2014.
Staff comments
1. Multiple sources ("China Cross-Border M&A Continues" and "Disclosable Transaction Offshore Acquisition by Times New Material") indicate that the face value of the loan from China Eximbank was equivalent to no more than 70% of the acquisition price (€290,000,000 EUR). For the time being, AidData assumes that the face value of the loan was equivalent to €203,000,000 EUR (€290,000,000*0.7). This issue warrants further investigation. 2. The issuance date of the commitment letter for the China Eximbank loan is unknown. However, it must have been issued prior to or on December 11, 2013, as it is mentioned in "Disclosable Transaction Offshore Acquisition by Times New Material" which was published December 12, 2013. Therefore, AidData has coded December 11, 2013 as the commitment date for the time being. This issue warrants further investigation.