APM Automotive Bhd : Others
The Board of Directors of APM Automotive Holdings Berhad ('APM') wishes to announce that on 29 September 2015, APM via its wholly owned subsidiary, Auto Parts Holdings Sdn Bhd ('APH') entered into a Joint Venture Agreement ('JVA') with Tinnos Asia Sdn Bhd, a subsidiary of Tinnos, Inc. ('Tinnos') to carry on the business of developing, manufacturing and supplying automotive In-vehicle Infotainment ('IVI') systems and Internet of Things ('IoT') products, which are of or derived from original designs of Tinnos and/or developed jointly by Tinnos and joint venture companies (the 'Products') to the Original Equipment Market and Replacement Equipment Market in Malaysia and other Asean countries.
Automotive IVI systems comprise a collection of hardware devices encompassing software which may be installed into automobiles, vehicles and other forms of transportation to provide audio and video entertainment as well as navigation systems. IoT products offer advanced connectivity of devices, systems and services in automobiles, vehicles and other forms of transportation such as Digital Clusters, Around View Monitoring Systems (AVM), Head up Display (HUD), Forward Collision Warning System (FCWS), Connected to V2X (Automotive Vehicle to Everything) Communication and other future joint development products.
Tinnos will provide the joint venture the technology and technical support to facilitate the setting up and operation of a production plant in Malaysia and subsequent production plants in other Asean countries, if commercially viable and the supply of systems, software, parts, materials and components for the manufacture of the Products.
STRUCTURE OF THE JOINT VENTURES
(a) Joint venture in Malaysia
A new joint venture company ('JV Co') will be incorporated under the proposed name 'Apinnos Sdn Bhd' to carry out the joint venture in Malaysia. The JV Co will have an authorized capital of RM5,000,000.00 (Ringgit Malaysia Five Million) divided into 5,000,000 ordinary shares of RM1.00 each. The issued and paid up share capital of RM2,000,000.00 (Ringgit Malaysia Two Million) will be subscribed by both parties in cash based on the following shareholding proportion:
- APH - 60% equity interest or 1,200,000 ordinary shares of RM1.00 each
- Tinnos - 40% equity interest or 800,000 ordinary shares of RM1.00 each
The investment in JV Co will be financed through internally generated funds.
(b) Joint venture in other Asean countries
A holding company will be incorporated in Malaysia (the 'JVC Holdco') to hold shares in the corporations to be incorporated in other Asean countries to carry out the joint venture. The proportion of the shareholdings in the JVC Holdco as between APH and Tinnos shall be 51% : 49%.
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 RM2,550,000.00 divided into 2,500,000 ordinary shares of RM1.00 each and 5,000,000 RPS of RM0.01 each. APH is a wholly owned investment subsidiary of APM.
Information on Tinnos
Tinnos Asia Sdn Bhd ('TASB') was incorporated in Malaysia on 4 June 2015 as a private limited company under the Companies Act, 1965 as an investment holding company. The authorized and paid up share capital of TASB is RM1,000,000.00 divided into 1,000,000 ordinary shares of RM1.00 each and TASB is a subsidiary of Tinnos, Inc.
Tinnos, Inc. is in the business of designing and supplying (i) electronic equipment, information technology equipment which is inclusive of communication equipment, information appliance, broadcasting equipment and parts, automatic instrument system; and (ii) information service, system software, development system software, application software, network, computer. Tinnos, Inc. is an ISO/TS16949 and ISO14001 certified manufacturer and it has the technical capability to design, develop and manufacture the automotive IVI and IoT products.
Rationale, risk factors and prospects involved in undertaking the JV
This JV arrangement is in line with the expansion plan of the Group into new products. The JV is expected to contribute positively to the profitability and growth of APM Group in the future. There is no special risk associated with the JV other than operational risks.
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 and of the JVC Holdco 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 60 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 2015.
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 29 September 2015.