Exclusive Rights To Distribute Renault Vehicles In Malaysia
BackMay 26, 2003
| Type | Announcement |
| Subject | Exclusive rights to distribute Renault vehicles in Malaysia |
Contents :
Introduction
We wish to announce that on 15 May 2003, TC Euro Cars Sdn. Bhd. (TCEC), a wholly owned subsidiary of Tan Chong Motor Holdings Berhad (TCMH) has entered into a Master Agreement with Renault s.a.s. (Renault) to import and distribute completely-built-up (CBU) vehicles and to assemble and distribute completely-knock-down (CKD) vehicles in Malaysia on an exclusive basis and to provide after-sales services to Renault vehicles in Malaysia.
Information on Renault group
Renault s.a.s. is one of the world leaders in the automotive sector manufacturing utility vehicles and passenger vehicles under the brand names Renault, Renault Samsung Motors and Dacia.
The Renault-Nissan Alliance sold 5.1 million vehicles in 2002, ranking the Alliance among the world’s five leading automakers.
Rationale for the project
The TCMH Group is constantly looking for opportunities to widen its operating base and earning capacity. The addition of Renault franchise will enable the Group to broaden its product range and further strengthen its position as a distributor within the Renault-Nissan Alliance. This additional business franchise will also enhance the TCMH Group’s future growth prospects.
Salient terms of the cooperation
The Master Agreement sets out the general terms and conditions of cooperation between the 2 parties.
Some of the salient points are:
1. The cooperation covers both the importation and distribution of CBU models and the assembly and distribution of CKD models on an exclusive basis.
2. The cooperation is subject to the following conditions precedent to be fulfilled by TCEC
a. securing the agreed number of import permits for the importation of CBU models
b. securing from the relevant authorities the assembly license
c. the execution of the relevant operating agreements.
3. The CKD vehicles shall be assembled by Tan Chong Motor Assemblies Sdn. Bhd., also a subsidiary of TCMH.
4. The initial tenure of the Master Agreement shall be for a period of 6 years and thereafter, unless otherwise terminated earlier in accordance with the terms of the Master Agreement, may be extended for a further period of 6 years on terms to be negotiated and mutually agreed upon.
Financial effect of the project
The total project financial commitment for the foreseeable period up to the end of 2004 in respect of product development, production and assembly facilities and working capital is estimated at between RM30 million and RM40 million to be funded by TCMH, partly from its internal resources. Mass production of vehicles for distribution is expected to commence in June 2004 with an initial volume of between 100 and 200 units per month. The venture is not expected to contribute significantly to the Group’s revenue and profit in the immediate term during the initial start up but is expected to produce reasonable rates of return over the medium term.
Approval and consent
The appointment of TCEC as the exclusive distributor of Renault vehicles in Malaysia has the consent of Nissan Motor Co. Ltd. of Japan with whom the Group, through another subsidiary company, Tan Chong & Sons Motor Co. Sdn. Bhd. has a pre-existing exclusive distributorship arrangement on Nissan vehicles.
TCEC will apply to the relevant authorities to obtain the necessary import permits and the assembly license mentioned under the conditions precedent set out above.
This business arrangement does not require shareholders’ approval.
Related party transactions
Transactions between the TCMH Group and Renault may be deemed as recurrent related party transactions under Chapter 10 of Listing Requirement of Kuala Lumpur Stock Exchange by virtue of the 44.4% shareholding of Renault s.a.s. in Nissan Motor Co. Ltd. which in turn owns 5.57% of the equity interest in TCMH.
TCMH Group hereby announces that pursuant to this business arrangement, it expects to enter into the following recurrent transactions of a revenue nature in the ordinary course of business with Renault s.a.s.:
We wish to announce that on 15 May 2003, TC Euro Cars Sdn. Bhd. (TCEC), a wholly owned subsidiary of Tan Chong Motor Holdings Berhad (TCMH) has entered into a Master Agreement with Renault s.a.s. (Renault) to import and distribute completely-built-up (CBU) vehicles and to assemble and distribute completely-knock-down (CKD) vehicles in Malaysia on an exclusive basis and to provide after-sales services to Renault vehicles in Malaysia.
Information on Renault group
Renault s.a.s. is one of the world leaders in the automotive sector manufacturing utility vehicles and passenger vehicles under the brand names Renault, Renault Samsung Motors and Dacia.
The Renault-Nissan Alliance sold 5.1 million vehicles in 2002, ranking the Alliance among the world’s five leading automakers.
Rationale for the project
The TCMH Group is constantly looking for opportunities to widen its operating base and earning capacity. The addition of Renault franchise will enable the Group to broaden its product range and further strengthen its position as a distributor within the Renault-Nissan Alliance. This additional business franchise will also enhance the TCMH Group’s future growth prospects.
Salient terms of the cooperation
The Master Agreement sets out the general terms and conditions of cooperation between the 2 parties.
Some of the salient points are:
1. The cooperation covers both the importation and distribution of CBU models and the assembly and distribution of CKD models on an exclusive basis.
2. The cooperation is subject to the following conditions precedent to be fulfilled by TCEC
a. securing the agreed number of import permits for the importation of CBU models
b. securing from the relevant authorities the assembly license
c. the execution of the relevant operating agreements.
3. The CKD vehicles shall be assembled by Tan Chong Motor Assemblies Sdn. Bhd., also a subsidiary of TCMH.
4. The initial tenure of the Master Agreement shall be for a period of 6 years and thereafter, unless otherwise terminated earlier in accordance with the terms of the Master Agreement, may be extended for a further period of 6 years on terms to be negotiated and mutually agreed upon.
Financial effect of the project
The total project financial commitment for the foreseeable period up to the end of 2004 in respect of product development, production and assembly facilities and working capital is estimated at between RM30 million and RM40 million to be funded by TCMH, partly from its internal resources. Mass production of vehicles for distribution is expected to commence in June 2004 with an initial volume of between 100 and 200 units per month. The venture is not expected to contribute significantly to the Group’s revenue and profit in the immediate term during the initial start up but is expected to produce reasonable rates of return over the medium term.
Approval and consent
The appointment of TCEC as the exclusive distributor of Renault vehicles in Malaysia has the consent of Nissan Motor Co. Ltd. of Japan with whom the Group, through another subsidiary company, Tan Chong & Sons Motor Co. Sdn. Bhd. has a pre-existing exclusive distributorship arrangement on Nissan vehicles.
TCEC will apply to the relevant authorities to obtain the necessary import permits and the assembly license mentioned under the conditions precedent set out above.
This business arrangement does not require shareholders’ approval.
Related party transactions
Transactions between the TCMH Group and Renault may be deemed as recurrent related party transactions under Chapter 10 of Listing Requirement of Kuala Lumpur Stock Exchange by virtue of the 44.4% shareholding of Renault s.a.s. in Nissan Motor Co. Ltd. which in turn owns 5.57% of the equity interest in TCMH.
TCMH Group hereby announces that pursuant to this business arrangement, it expects to enter into the following recurrent transactions of a revenue nature in the ordinary course of business with Renault s.a.s.:
Estimated amount for the
year ending 31.12.03
(RM m)
year ending 31.12.03
(RM m)
Product development, engineering, assembly
equipment & facilities 12
Purchase of goods, CBU vehicles, CKD kits and parts 10
As and when appropriate, TCMH will seek its shareholders’ mandate or make such announcement in accordance with the Listing Requirement in respect of related party transactions undertaken by the Group in the future.
Disclosure of director’s and major shareholder’s interests
Except for Nissan, a substantial shareholder of TCMH in which Renault s.a.s has an equity interest, none of the directors and major shareholders has any interest direct or indirect in the distributorship arrangement.
Directors recommendation
Your Board of directors are of the opinion that the venture to be undertaken is in the best interest of the Company.
equipment & facilities 12
Purchase of goods, CBU vehicles, CKD kits and parts 10
As and when appropriate, TCMH will seek its shareholders’ mandate or make such announcement in accordance with the Listing Requirement in respect of related party transactions undertaken by the Group in the future.
Disclosure of director’s and major shareholder’s interests
Except for Nissan, a substantial shareholder of TCMH in which Renault s.a.s has an equity interest, none of the directors and major shareholders has any interest direct or indirect in the distributorship arrangement.
Directors recommendation
Your Board of directors are of the opinion that the venture to be undertaken is in the best interest of the Company.
Announcement Info
| Company Name | TAN CHONG MOTOR HOLDINGS BERHAD |
| Stock Name | TCHONG |
| Date Announced | 26 May 2003 |
| Category | General Announcement |
| Reference No | TC-030522-36558 |