Yantai, China – Linglong is raising up to €259 million (2 billion yuan) through convertible bonds to fund the automation of its tire plant in Liuzhou, Guangxi as well as make up for its cash flow, said the company’s filing last week.
About €195 million will be pumped into the ongoing Phase-One construction of the Liuzhou plant, which has expected annual capacity of 10 million unit for passenger car tire and 1 million unit for truck and bus tire. Phase-Two has the same capacity planned.
As of April 2017 the plant had 5 million unit per year passenger car tire capacity, and the remaining facilities of Phase-One will be built with automated processes from mixing to storage, said Linglong’s investor relations representative Sun Shaolong. It won’t be fully automated, he added.
The existing facilities may also be upgraded, said Sun. “Those were advanced facilities at the time but we might replace them if new machinery can provide considerably better product performance and quality stability.”
The overall Phase-One project is scheduled to come on stream one year upon regulatory approval, according to Sun. It’s forecast to generate €22 million annual profit on revenue of €251 million.