London - A company based in the tax haven of the British Virgin Islands is planning to raise up to $33 million on the UK's AIM alternative investment market to upgrade a bicycle tyre factory in China.
The company, Rising Tyre Co., is the holding company for its wholly owned subsidiary Linyi Unique. Linyi Unique is incorporated in China and makes tyres and inner tubes for bicycles, motorcycles and mopeds. It acquired the production assets and business of Shandong Zhengxing, on 7 February 2007. According to Chinese Rubber Industry Association, Shandong Zhengxing was ranked the third largest bicycle tyre manufacturer by net profit and the fourth largest by revenue in China.
According to documents filed with the AIM, the company is seeking to raise up to $33 million from the placing (including expenses), which will be mainly invested in the Group's new production facilities. The Group is building a new plant to provide additional production capacity. It is anticipated that the new facilities of the Group, once operational, will double the current annual production capacity to approximately 60 million tyres and 80 million inner tubes per annum by 2009. The Directors expect the new facilities to be partially operational by the end of 2007.
According to documents filed with the AIM, Shandong Zhengxing has had a technical cooperation agreement with Continental AG since 2004 and has supplied Continental-branded tyres to Conti. The documents do not say whether this off-take contract is still in place.
The documents say Chinese demand for bicycle tyres is anticipated to grow at 4 percent per annum between 2007 and 2015. In 2005, 516 million bicycle tyres were manufactured in China, so volume growth is around 20 million units per yearl. The company is increasing its output of motor cycle tyres because sales of these in China are forecast to grow by 8Â percent per annum until 2015. In 2004 the company manufactured only bicycle tyres and inner tubes. In 2006 this had grown to six products with motor cycle tyres accounting for 12Â percent of production volume. Motor cycle tyres are more profitable than bicycle tyres, said the company.
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Disclosure data from AIM (Via Yahoo! business) from Rising Tyre
Website of Rising Tyre (Chinese language and requires a login)
Forbes (UK) story (Rising Tyre Co to raise up to 33 mln usd via placing ahead of Oct 30 AIM debut)