FINDLAY, Ohio—Cooper Tire & Rubber Co. has signed an agreement with Chengshan Group Co. Ltd. and the labor union representing workers at the companies' Cooper Chengshan (Shandong) Tire Co. Ltd. joint venture.
During a Jan. 31 investor conference call, Findlay-based Cooper said the agreement establishes a formal process for determining the future ownership of CCT and resolving other key issues.
As part of the agreement, Cooper and Chengshan will engage a yet-to-be-named independent valuation firm to determine the fair market value of the joint venture.
Once a valuation is established, Cooper said Chengshan will have 45 days either to purchase Cooper's 65 percent stake in the company or sell its own 35 percent interest to Cooper. Should Chengshan decide not to exercise either option, Cooper has the right under the agreement to purchase Chengshan's share.
A floor value of $435 million has been set for the business, and the price of the options will be based on the higher of either the floor amount or the value determined by the independent valuation firm, Cooper CFO Brad Hughes told investors during the call.
In the event that neither Cooper nor Chengshan elect to purchase the others' interest in the join venture, the agreement allows for it to continue under its existing structure. As the agreement is only a framework, both parties still would be able to negotiate other arrangements that would settle ownership in a different manner, according to Cooper Chairman, President and CEO Roy Armes.