| Type | Announcement |
| Subject | TAN CHONG MOTOR HOLDINGS BERHAD (“TCMH” or “the Company”) Sole and Exclusive Right to Distribute Nissan Vehicles in Laos |
| Contents | Introduction The Board of Directors of TCMH is pleased to announce that on 31 March 2010, ETCM (L) Pty Ltd (“ETCM (L)”), a wholly-owned subsidiary of TCMH Group, has entered into a Distribution Agreement (“Agreement”) with Nissan Motor Co, Ltd (“NML”) in respect of the sole and exclusive right to distribute Nissan brand completely built-up (CBU) vehicles (“Vehicles”) in Laos. Information on ETCM (L) ETCM (L) is a wholly-owned subsidiary of ETCM (Labuan) Pty Ltd, a wholly-owned subsidiary of Edaran Tan Chong Motor Sdn Bhd, which in turn is a wholly-owned subsidiary of TCMH. ETCM (L) was incorporated under the Labuan Companies Act 1990 in the Federal Territory of Labuan, Malaysia on 8 October 2009 to carry on the principal activities of import, export and distribution of motor vehicles. Information on NML NML is the third largest automobile manufacturer in Japan and a global automotive company engaged in development, manufacture and assembly of motor vehicles and parts and also in the distribution of motor vehicles and parts. NML is established in all major auto markets worldwide, selling a comprehensive range of cars, pickup trucks, SUVs and light commercial vehicles under the Nissan and Infiniti brand names. It achieved vehicle sales of 3.36 million units for the period January to December 2009. Salient Terms of the Agreement Pursuant to the Agreement, NML grants ETCM (L) the sole and exclusive right to purchase the Vehicles from NML and to distribute the same in Laos including the rights to appoint any person as its dealers to sell the Vehicles and/or perform after-sales services on the Vehicles. The initial term of the Agreement shall be for a period of two (2) years (“Initial Term”) from the date of the Agreement and shall automatically be extended for further periods of one (1) year each unless otherwise terminated by either party with at least six (6) months’ notice to the other party prior to the expiry of the Initial Term or extensions thereof. Rationale We began extending our geographical reach by establishing sales, service and spare parts presence in the Indochina region. The TCMH Group has historically been a regional ‘representative’ for NML. The expansion of the Group’s 50-year alliance with NML into the vehicle market in Laos provides a strategic benefit to spread our Nissan business outside of Malaysia to tap into emerging markets. Our local knowledge of the region will add value to Nissan global brand presence in ASEAN in line with further AFTA market liberalization. Financial Effects The total financial commitment for the new Nissan business in Laos for the first five years of operation including setting up of showrooms and working capital is estimated at USD5.0 million to be funded by TCMH Group from its internal sources. Distribution of the Vehicles in Laos via a wholly-owned subsidiary of TCMH Group to be set up in Laos is expected to commence in the second quarter of 2010 with an initial sales volume of 200 units per year. The new business venture is not expected to contribute significantly to 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 1 April 2010. |
| Company Name | TAN CHONG MOTOR HOLDINGS BERHAD |
| Stock Name | TCHONG |
| Date Announced | 1 Apr 2010 |
| Category | General Announcement |
| Reference No | TC-100401-64497 |
