Hong Leong Asia unit buys $31m Thakral stake

Feb 08, 2005
The Straits Times

HONG Leong Asia's New York-listed subsidiary, China Yuchai International, is acquiring a near 15 per cent stake in Thakral Corporation for $30.9 million.

Thakral, which will use the money to expand into new businesses, also announced yesterday that it plans to set up a China holding company and expand operations there.

The trading and distribution company expects more business to be conducted on the mainland with the impending reduction of import duties. It will move its operational headquarters to Shanghai.

Its deal with China Yuchai involves the sale of 264 million new shares in a private placement. This will give China Yuchai 14.99 per cent of Thakral's enlarged share capital, making it the third-largest shareholder and giving it the right to nominate three members to the board.

'This strategic investment from China Yuchai will allow us to tap the immense opportunities in the high-growth economies of China and India as well as other countries in Asia,' Thakral's managing director, Mr Inderbethal Singh Thakral, said.

He added that Hong Leong Asia's global reputation and strengths will help sharpen Thakral's competitive edge.

For China Yuchai, the acquisition of the Thakral stake is part of a diversification plan to acquire investments in the greater China region and elsewhere in Asia to broaden its income base. This will enable it to reduce its financial dependence on its sole operating asset, Guangxi Yuchai Machinery.

Thakral yesterday also reported that net profit for the third quarter ended Dec 31 plunged 45 per cent to $4.4 million. Sales were flat, at $139.3 million.

For the nine months ended Dec 31, net profit shrank 16 per cent to $13.8 million while turnover edged up 3 per cent to $400.4 million.