China Automotive Systems, Inc. (CAAS) to Take Majority Stake in Fujian Qiaolong

China Automotive Systems, Inc. (Nasdaq: CAAS) has entered into an agreement to acquire a 51.0% equity control position in Fujian Qiaolong Special Purpose Vehicle Co., Ltd. ("Fujian Qiaolong").

Fujian Qiaolong was founded in 1993 and currently produces special emergency vehicles (emergency power source vehicles, heavy flow drainage vehicles, emergency drainage vehicles, etc.) and civil service vehicles (vending vehicles, garbage trucks, medical waste transportation vehicles, etc). Located in Longyan, Fujian Province, almost 200 people including more than 20 technical personnel are employed at Fujian Qiaolong, which has production capacity to modify approximately 4,000 special services vehicles annually. Fujian Qiaolong Special Purpose Vehicle Co. had no affiliation with CAAS prior to the acquisition.

For the 2013 year, Fujian Qiaolong had revenues of approximately RMB 41.6 million with net earnings of about RMB 6.5 million. Registered capital is approximately RMB 20 million with assets totaling RMB 67.5 million as of the end of 2013. The total purchase price is approximately $3.0 million in cash. Upon completion of the acquisition, CAAS will further provide a loan of RMB 30.0 million ($4.8 million) to Fujian Qiaolong at an annual interest rate of 8.5% to further its expansion. The detailed terms of the loan will be negotiated separately. No other terms of the acquisition were disclosed.

Mr. Hanlin Chen, Chairman of China Automotive Systems, commented, "Special service vehicles are a growing segment within the commercial vehicle market, as China continues to move towards greater urbanization. Being the largest power steering producer in China, we have developed relationships with many OEMs and components suppliers over the last two decades. In the past few years, due to our strong cash flows and solid balance sheet, we began researching acquisition opportunities. During our 8-months due diligence, we were impressed with Qiaolong's best-in-class product offerings and ongoing strong growth prospects. Similar to CAAS, Qiaolong is a company with strong product specialization and a long-standing track record. We look forward to developing new growth opportunities as we expand our operations and create greater value for our shareholders."

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