Earlier this week, Cooper Tire & Rubber Co. extended the option commencement deadline within the agreement to determine the future ownership of Cooper Chengshan Tire (Shandong) Co. Today, Cooper announced that the new option agreement extends the option commencement deadline to Aug. 24.
Aug. 11 was the stated deadline the parties established back in January to sort out the future ownership of Cooper Chengshan Tire Co.
In January, after Cooper ended any deal with Apollo, the Findlay, Ohio-tiremaker signed a deal with Chengshan Group Co. and the CCT labor union to determine the future of the Cooper Chengshan Tire Co. plant.
Under the agreement, the CCT venture could be bought out by Chengshan, purchased by Cooper or continue the current ownership arrangement.
Chengshan owns 35% of CCT, while Cooper owns 65%. Under the pending agreement, a process to establish a fair market value of CCT through an independent evaluation was determined. Following the evaluation, Chengshan has the first option to buy Cooper’s share of CCT for $283 million, or more based on the evaluation. The company will also have the first option to sell its 35% shares to Cooper.
Should Chengshan purchase Cooper’s stake in the joint venture, Cooper will continue to have off-take rights with CCT agreeing to produce Cooper brand products, including its truck and bus radial tires for a minimum of three years.
If Chengshan decides not to exercise either option after 45 days, Cooper will have the same amount of time to exercise its right to purchase Chengshan’s 35% interest for $152 million or more based on fair market value.
If neither party elects to purchase the others’ interest, the agreement allows for continuation of the joint venture as currently structured.
In announcing that the deadline was extended to Aug. 24, Cooper Chairman and CEO Roy Armes said, “Resolving the future ownership of CCT has remained a priority for our organization as we continue to move forward with our growth plans for China. Today’s announcement is another step in that process. As we have previously stated, Cooper is confident in our growth plans for China regardless of who owns CCT in the future.”