Goodway to Set Up Tyre & Retread JV in China

Malaysia’s stock exchange, the Bursa Malaysia, has released news that Goodway Integrated Industries has signed a joint venture agreement through its wholly owned Hong Kong subsidiary Goodway Pte Limited with Hong Kong based World Bond Ltd, a company jointly owned by two residents of China, Lu Xiao Fei and Guan Huai Yun. The joint venture company, Newco, will engage in the manufacture and sale of tyres, “recycled rubber tyres” and precured tread liner.

Under the joint venture agreement, Newco will subscribe for 9,999 new ordinary shares of HK$10 (£0.64) nominal value in a newly incorporated Hong Kong company, which will then acquire two wholly-foreign owned entities (WFOEs) for HK$20 million (£1.27 million). The WFOEs will carry out the business of manufacturing and selling the above-mentioned products within the People’s Republic of China in accordance with the terms of the joint venture agreement.

The Goodway subsidiary will hold 60 per cent equity in the joint venture company, a share it has financed through internal funds. The Bursa Malaysia statement, released September 5, reports that the newly signed agreement is in line with Goodway’s current expansion plan into China, and would allow the group to consolidate and expand its current operations there at a relatively low investment cost. It added that Goodway’s Board of Directors remain “optimistic on the future potential of the tyre retread business in the PRC” and they believe the joint venture to be in the best interest of Goodway Integrated Industries.

Completion of the joint venture agreement is subject to the successful incorporation of Newco and the ‘Hong Kong company’ in Hong Kong and the WFOEs in China, and thus requires approval from the relevant authorities in these jurisdictions. Barring any unforeseen circumstances, approval will be sought within 6 months from the date of the agreement’s execution.