Antonov secures additional customers in China

The board of vehicle technology company, Antonov, whose technical centre and headquarters is based in Warwick in the UK is pleased to announce that in addition to the customer win with Lifan Motors announced on 4 December 2008 for its new TX6 six-speed automatic transmission, the company has now secured two further customer orders in China for its products. In addition, the ongoing discussions with the municipal Chong Qing government for the set up of a Chinese plant for the production of its automatic gearbox have concluded that Antonov can access the majority of the funding required to set up its Chinese production from Chinese sources.

These are significant developments for Antonov and demonstrate the strong demand for its technology within the Chinese marketplace. They also create a solid platform for ongoing commercial negotiations with potential partners for the planned manufacturing joint venture in Chong Qing. Demonstrations of the Antonov test vehicle continue in Shanghai and further vehicle makers will be added to this initial customer list over the next six months. Further orders will be sought late in 2009 once pre-production units are available.

Commenting on the customer orders, John Moore, CEO said: “This is excellent news which represents significant progress in the commercialisation of our technology within the important Chinese car manufacturing marketplace. With each new customer win, we strengthen our commercial position enabling the group to secure better terms with both suppliers and customers and in turn to maximise the returns from the planned manufacturing joint venture.”

The company has held discussions with government agencies in relation to the following funding options that are available to support the development of the Chinese production plant:

Land and custom buildings and infrastructure can be provided in a suitable economic development zone to lease, avoiding the need for Antonov to make any upfront capital investment

Bank loans for the purchase of capital plant and tooling can be underwritten to enable preferential interest rates to be obtained

A specific investment fund has been set up jointly between the government and banks to provide equity funding for high technology manufacturing and the Antonov production plant qualifies for this funding

These options will provide substantial support for the planned investment in the Chinese production plant and can, in aggregate, meet more than half the estimated funding requirement of €40 million. In setting up the manufacturing Joint venture, the Chinese partners will invest cash and Antonov will bring its past product development investment and some new cash. In combination, the company now expects that its total cash contribution to the joint venture will not exceed 10 per cent of the total funding requirement to achieve a 49 per cent equity stake. Whilst Chinese joint ventures must be majority owned by Chinese operations, the support of the local investment fund will ensure that Antonov retains the largest shareholding in the venture. In the short term, the municipal government has also offered to co-fund the initial Lifan vehicle prototype program as a demonstration of its commitment to attract Antonov to Chong Qing.

Commenting on the funding options, John Moore, added: 'The work we have done in the last 12 months to bring our product to China and secure customers has greatly strengthened our commercial position. In the light of these other funding sources available to us, we can now drive for a much better deal for our shareholders in our joint venture negotiations by maximising the value placed on the existing product investment we have made in the last three years and minimising the new investment Antonov must make to secure our stake in the manufacturing joint venture.'

Antonov’s major innovation for an electronically controlled six-speed automatic transmission is based on new kinematics (the motion of the gears and other components) and structural design, which has achieved for the first time a combination of planetary gears and parallel transfers of power. Significantly, the traditional torque converter has been eliminated and replaced with a simple wet clutch, reducing cost, weight and size, whilst improving mechanical and fuel efficiency as well as retaining the virtually seamless gearshifts of an automatic transmission. In addition, the transmission uses components similar to those of current production automatics, offering Chinese carmakers low development costs and the ease of introducing a new product into production. The transmission is protected by worldwide patents.

Further information on Antonov can be obtained from the company’s website antonovat.com