Aeolus raising €130m for 'giant off-road' tire project

Shanghai, China – Aeolus Tire is planning to raise up to Yuan 1.1 billion (€130 million) in an A-share issuance to specific investors to fund its ongoing giant off-the-road (OTR) tire project, the company announced on 17 July.

The project, based at Aeolus’s existing facility in Jiaozuo, is estimated to cost Yuan 1.4 billion, the bulk of which will be funded by the share issuance, said an Aeolus notice to the Shanghai Stock Exchange (SSE).

This is the second time Aeolus has proposed a share issue for the project, having withdrawn an earlier plan to raise Yuan 300 million (€37 million) in April. (ERJ report)

As previously disclosed, the project will add production capacity for 20,000 units per year of giant OTR tires at the upgraded facility.

According to an environmental impact report from April last year, the Aeolus site currently has capacity to produce 130,000 all-steel OTR tires and 1.2 million all-steel radial truck tires annually.

However, Aeolus is now completing an earlier project to convert the lines to focus on giant engineering tires, expanding capacity by just under 111,000 units per year and eliminating capacity for 1 million TBR tires.

With a two-year completion window, the projects will eventually enable production of 260,930 all-steel OTR tires and 200,000 all-steel load-carrying truck and bus tires per year.

In its latest announcement, Aeolus noted that the global market for giant all-steel OTR radial tires is dominated by Michelin, Bridgestone and Goodyear, while Chinese producers remain “still in the early stages.”

The project, said the 17 July SSE filing, will focus “entirely on giant OTR radial tires” with rim sizes above 48 inches, aiming to improve the group’s capacity and product offering in the segment.

Aeolus said its current production of such tires is at “near full capacity” and the new project will help relieve bottlenecks, capture more market share, and improve profitability.

The company expects to ramp up production within four years, with annual commissioning rates of 30%, 60%, 80%, and 100% over that period.

At full capacity, Aeolus expects the project to generate annual sales of Yuan 1.56 billion.