Tokyo—Yokohama Rubber Co. Ltd is to borrow Yen157.5 billion (€1.37 billion) to help fund its acquisition of off-road tire maker Alliance Tire Group BV.
The debt-finance deal, with Mizuho Bank Ltd, was formally agreed at a meeting of Yokohama's board of directors on 28 June, the company announced.
The borrowing execution date is 1 July - the completion date for the acquisition of Mumbai, India-based ATG - with a final payment deadline set for 28 June 2017.
As first revealed by ERJ in March, Yokohama is buying ATG for $1.18 billion (€1.06 billion) from global investment firm KKR & Co. L.P. and other parties.
YRC produces OTR tires at a plant in Onomichi, Japan, and via an off-take agreement with Shandong Xingda Tyre Co. Ltd. of Dongying, Shandong, China, but it does not produce or sell agricultural tires.
Yokohama noted it expects demand for farm and forestry tires to increase as a result of the growing use of agricultural machinery, which it said is crucial to improve agricultural efficiency to meet the increasing food needs for the world’s growing population.
Yokohama disclosed plans in early 2015 to commit $1 billion in investment over five years to expand and upgrade its tire production worldwide, increasing annual production capacity 13 percent by 2017 and nearly 31 percent by 2020.
It recently earned a top supplier award from Caterpillar Inc. in the heavy-equipment maker’s Supplier Quality Excellence Process.
Warburg Pincus and Mahansaria joined forces in July 2007 to acquire majority control of what previously was known as Alliance Tire Co. (1992) Ltd. of Hadera, Israel, in a deal valued at $150 million.