Cooper China Hearing Postponed, Weihai Court Official Says
The Weihai Intermediate People’s Court pushed back the Sept. 24 hearing to an undetermined date, said a court official, who asked not to be identified, citing court rules. In the July 29 lawsuit, China’s Chengshan Group sought the dissolution of its venture with Cooper, saying the U.S. partner’s proposed $2.5 billion buyout by India’s Apollo Tyres Ltd. (APTY) would undermine the Chinese venture’s operations. Cooper has said the litigation lacks merit.
The Chinese joint venture operates Cooper’s biggest manufacturing facility worldwide, according to the venture’s union, and workers at the factory have stopped producing Cooper tires since July 13 in protest of the Apollo deal. The Indian company has said the litigation is “immaterial” to the acquisition and that the only pending approval is from shareholders on a vote at the end of the month.
“The lawsuit may lead to some further delay in the closing of the deal as it may change the value of the transaction,” said Basudeb Banerjee, an analyst at Quant Broking Ltd. in Mumbai. “If the JV is dissolved, then it may reduce the price for Apollo.”
The Chinese venture’s prospects have been jeopardized by the deal, with suppliers calling to press for payments and some orders being canceled, according to a June 18 letter posted on Chengshan Group’s website. Cooper also didn’t meet its obligations by failing to consult with the union, it said.
Apollo is planning to fund the purchase partly through a $1.875 billion sale of high-yield bonds issued by Cooper. The timing of the bond sale will be determined this week, Apollo CFO Sunam Sarkar said yesterday.
Cooper Chengshan (Shandong) Tire Co., founded in 2006 in the eastern Chinese city of Rongcheng, has more than 5,000 workers and has the capacity to produce 15 million tires a year, according to its website.
The venture earned $106.5 million in pretax profit in 2012, according to its union. By comparison, Cooper’s pretax income almost tripled to $368 million last year.
To contact the editor responsible for this story: Young-Sam Cho at firstname.lastname@example.org