AIM Share Placing Planned to Double Capacity

Rising Tyre Co Ltd has announced it intends to raise as much as £16.2 million, including expenses, through a share placing, ahead of its Alternative Investment Market debut on October 30. The company said proceeds from the placing will primarily be invested in its new production facilities

Rising Tyre is the British Virgin Islands incorporated holding company for its wholly owned subsidiary Linyi Unique, a China based firm principally engaged in the manufacture of tyres and inner tubes for bicycles, motorcycles and mopeds. Linyi Unique acquired the production assets and business of Shandong Zhengxing, on 7 February 2007.

According to the Chinese Rubber Industry Association, Shandong Zhengxing was ranked the third largest bicycle tyre manufacturer by net profit and the fourth largest by revenue in China, with sales growing from RMB237 million (£15.5 million) in 2004 t0 RMB488 million (£32 million) by the end of 2006. Operating profit grew to RMB102m (£6.7 million) from RMB63m (£4.1 million) over the same period. The company also benefited from technical assistance agreements with Continental AG, which the new owners inherited upon their purchase of Shandong Zhengxing.

The money raised from the placing will increase production capacity, and once the company’s newest facilities are operational capacity will double to approximately 60 million tyres and 80 million inner tubes per annum by 2009. Company directors expect the new facilities to be partially operational by the end of 2007.

In 2006 motorcycle tyres accounted for 12 per cent of Linyi Unique’s production. The company is increasing its output of motor cycle tyres as sales of these in China are forecast to grow by 8 per cent per annum until 2015. Linyi Unique is also looking to expand export sales.