| Type | Announcement |
| Subject | TAN CHONG MOTOR HOLDINGS BERHAD (“TCMH” or “the Company”) Sole and Exclusive Right to Assemble and Distribute Silver Bus Vehicles |
| Contents | Introduction The Board of Directors of TCMH is pleased to announce that on 8 September 2010, Tan Chong Industrial Equipment Sdn. Bhd. (“TCIE”), a wholly-owned subsidiary of TCMH, has entered into an Exclusive CKD Franchise and Distribution Agreement (“Agreement”) with Xi’an Silver Bus Corporation (“Silver Bus”) in respect of the sole and exclusive right to assemble and distribute completely knocked-down (“CKD”) buses under the brand of Silver Bus (“Vehicles”) in Malaysia and such other countries as TCIE and Silver Bus ("Parties") may agree from time to time (“Territory”). Information on TCIE TCIE, a wholly-owned subsidiary of TCMH, was incorporated under the Companies Act, 1965 in Malaysia on 5 December 1972 with a current authorized and paid-up share capital of RM200,000,000 and RM169,000,000 respectively. It has been involved in the distribution of trucks and buses under the brand of UD Trucks (formerly Nissan Diesel) since 1978 and has established itself as one of the leading commercial vehicle distributors in Malaysia. Currently, TCIE operates 11 UD 3-S centres in Malaysia, supported by 29 UD authorised sales dealers and 36 authorised service dealers. TCIE also provides 24-hour breakdown service. Information on Silver Bus Silver Bus, a company incorporated under the laws of the People’s Republic of China in 1994, is a joint venture company between Volvo Bus Corporation (“Volvo”) and Xi’an Aircraft Industry (Group) Company Limited (“XAC”). Through the joint venture, Silver Bus is able to capitalise on the technologies of Volvo products and the standards used in aircraft assembly from XAC in developing high standard coaches. Since its establishment, Silver Bus has rolled out a series of high grade coaches, including B10M, B12M, 9300, 9600, 9800, 990 and 900 and established itself as a market leader in the luxury coaches market in China. Salient Terms of the Agreement Pursuant to the Agreement, Silver Bus grants TCIE, among others, the sole and exclusive right: (a) to assemble, distribute and sell the Vehicles in the Territory; (b) to construct or perform body paneling works in respect of the bus chassis assembled by TCIE using the CKD parts supplied by Silver Bus and localised parts; and (c) to perform after-sales services on the Vehicles. The Agreement is conditional and subject to the fulfillment of the following conditions precedent within a period of four (4) months from the date of the Agreement or such extended period(s) as shall be mutually agreed upon by the Parties: (a) signing of Technical Assistance Agreement and After Sales Service Agreement (including Overseas Warranty Policy) by the Parties; and (b) TCIE obtaining the approval/license to assemble the Vehicles from the government authority of the Territory. The effective period of the Agreement shall be ten (10) years from the effective date of the Agreement (i.e. when the Agreement becomes unconditional). TCIE and Silver Bus shall negotiate and discuss the renewal of the Agreement at least six (6) months prior to the expiration of the Agreement subject to the terms and conditions to be mutually agreed upon. Rationale TCIE has an established sales and after-sales service network for UD Trucks vehicles throughout Malaysia. Assembly of UD Trucks vehicles is done by Tan Chong Motor Assemblies Sdn. Bhd., a related company of TCIE. The assembly and distribution of Silver Bus vehicles will be carried out using the existing business structure of TCIE thus enabling TCIE to expand its product range into Chinese luxury coaches with minimal capital expenditure investments. UD Trucks Corporation (formerly known as Nissan Diesel Motor Co., Ltd.) has given its consent for TCIE to engage in the importation and distribution of buses under the Silver Bus brand in Malaysia. Financial Effects The capital expenditure required for the new business venture including purchase of jigs and accessories for the assembly of Vehicles is estimated at RM100,000 to be fully funded by TCIE from its internal sources. Distribution of the Vehicles in Malaysia is expected to commence in the second quarter of 2011 with a projected sales volume of 80 units in the first year of operation. For the year ended 31 December 2009, TCIE sold 1,810 units of UD trucks and buses. The new business venture will not have any material impact on the Group’s revenue and profit for the year ending 31 December 2010 but is expected to contribute positively to the earnings of the Group in the long term. Directors’ and Major Shareholders’ Interests None of the directors and major shareholders of TCMH and/or persons connected with them have any interest, direct or indirect, in the Agreement. Directors’ Statement The directors of TCMH are of the opinion that the Agreement is in the best interest of the TCMH Group. This announcement is dated 8 September 2010. |
| Company Name | TAN CHONG MOTOR HOLDINGS BERHAD |
| Stock Name | TCHONG |
| Date Announced | 8 Sept 2010 |
| Category | General Announcement |
| Reference No | TC-100903-70637 |
