On November 29, GMG, a subsidiary of Sinochem International, and Teok KunZhujun Co.rporation, the shareholder of Teck Bee Hang Trading Co., held the contract signing ceremony in Singapore, according to which GMG and affiliated companies acquired 55% of Tech Bee Hang Trading Co.’s shares without any assets by debt issuanceby means of bearing debt. This indicates that GMG has finished its merger stage of acquiring Tech Bee Hang Trading Co., a Thailand natural rubber processing group, and the project drives into the integration stage.
Founded by Li Yintong, a famous overseas Chinese, in 1954, Tech Bee Hang Trading Co. became one of the largest natural rubber processing enterprises all over the world in 1990s. However, it has been mired in difficulties because of operation strategies and market competition and has been in the state of breakeven or deficit since 2003. Currently, the annual production capacity of Teck Bee Hang Trading Co. reaches 200 thousand tons. Five processing factories lay out in major natural rubber producing areas in Thailand including Sura, Thung Song, Pattani, Yala and Narathiwat, where have the largest natural rubber planting density all over the world.
GMG and Li Family, shareholder of Tech Bee Hang Trading Co., began to formally negotiate the mergers and acquisitions from November 2009 and signed cooperation MOU on March of this year through which the cooperation intention was confirmed. Thereafter, issues including countries access, assets pricing, cooperation structure and debts combination were solved successively. In mid-November, details of cooperation were confirmed and the cooperation entered signing stage. It deserves to be mentioned that through the joint efforts of GMG and Tech Bee Hang Trading Co., eightsix creditor banks are persuaded to deal with the debts at a discount, earning debt restructuring profits with the amount of 7.5 million USD.
Tech Bee Hang Trading Co. had been the benchmark of the natural rubber processing enterprises in Thailand. With perfect processing and quality assure system, its products represented the highest level of Thailand’s natural rubber products and nearly passed certifications of all high-end tyre enterprises. With wide brand recognition in the industry, it has prominent acquisition value.
The acquisition of Tech Bee Hang Trading Co. is an important step of Sinochem International’s extension strategy of natural rubber's upstream resources. Through the acquisition, Thailand, the largest natural rubber producing country in the world, China, the largest natural rubber consuming country, and Singapore, the centre country for the world’s natural rubber trades, can integrate dynamically, further strengthening the differential advantages of Sinochem International’s natural rubber business. In the aspect of business, Sinochem International's natural rubber processing capacity rise to 500 thousand tons from 300 thousand tons, through which the natural rubber resource site of Sinochem becomes the largest natural rubber producing area in the world. The integration of Tech Bee Hang Trading Co.’s processing capacity and brand advantage in the main producing area of raw materials and Sinochem International’s capital and market advantage can significantly enhance the global competitiveness of Sinochem's natural rubber business.