SHIG-Weichai Group Takes Control of the World's Largest Luxury Yacht Manufacturer To Jointly Explore Global Luxury Yacht Market with Ferretti

To Optimize Utilization of Resources & Deliver Synergies

JINAN, China, Jan. 10, 2012 /PRNewswire-Asia/ -- Shandong Heavy Industry Group-Weichai Group ("SHIG-Weichai Group" or "the Group") announced that it has reached agreements with the major creditors of the world's largest luxury yacht maker, the Italian company Ferretti Group ("Ferretti"), to acquire a controlling interest in Ferretti by participating in Ferretti's debt restructuring.

(Photo: http://photos.prnewswire.com/prnh/20120110/HK33143 )

Through a total investment of 374 million euros, including equity investment of 178 million euros and provision of debt financing of 196 million euros, SHIG-Weichai Group will acquire a 75% interest in the yacht maker after the completion of the debt restructuring procedures. RBS and funds under the management of Strategic Value Partners will invest alongside SHIG-Weichai and both become 12.5% shareholders. Through the acquisition, Ferretti's capital structure will be fully restructured with equity capital increase by 100 million euros and total debts reduce to a reasonable level at around 100 million euros. The business will enjoy a strong capital base which will help drive its long-term development plans.

Mr. Tan Xuguang, Chairman of SHIG-Weichai Group, said "Developing the yacht business is one of the Group's strategic goals for the next five years. Ferretti, which possesses iconic international brands, state-of-the-art manufacturing technologies, products of the highest quality and an extensive sales network, is an ideal partner with strong strategic values. Through the acquisition, the Group will cooperate closely with this world-renowned yacht maker, providing Ferretti with new channels to market and capital support as well as other resources with which it can expand more effectively into emerging markets, a key area of potential growth for Ferretti. Synergies between the Group and Ferretti can be unleashed through the sharing of resources and industrial integration. Ferretti's overall competitive advantages in production cost, sales channels, after-sales service and financial strength will be improved, creating a win-win situation that will allow Ferretti to consolidate its leading position in the luxury yacht market."

Mr. Norberto Ferretti, Chairman of Ferretti Group, declared "We are very proud of this agreement with a prestigious partner such as SHIG-Weichai Group. We are strongly convinced that this partnership will lead to very satisfactory results and will provide Ferretti Group with a strong capital base that will allow the development of long-term growth plans. Moreover, China is one of the most rapidly developing countries for the yachting sector and has great potential for the coming 5 to 10 years."

John Davison, RBS Global Head of Strategic Investment, said "RBS has a longstanding relationship with Ferretti Group and have a very high regard for the business that Norberto has built. We are delighted to have the opportunity to invest alongside SHIG-Weichai in Ferretti and look forward to a very successful partnership with SHIG-Weichai and continuing our relationship with Ferretti."

Ferretti, the world's largest luxury yacht manufacturer, boasts some of the world's most advanced naval research and development centers (AYT -- Advanced Yacht Technology) and a team of architects and designers (Centro Stile). It also has a comprehensive global supply chain which includes more than 800 suppliers, as well as some of the world's most advanced yacht manufacturing systems. Ferretti has eight highly regarded and recognized yacht brands and owns a total of 8 shipyards in Italy as well as in Miami, USA, and employs nearly 2,000 people. As a result of the combination of a relatively highly leveraged balance sheet and the continued lower demand levels for certain classes of luxury yachts post 2009, Ferretti's operations have been affected and necessitated the strong partnership of SHIG-Weichai, RBS and Strategic Value Partners to assist Ferretti in restructuring its financial debts with a recapitalization.

SHIG-Weichai Group is one of the most competitive equipment manufacturing groups in China offering a broad range of high quality commercial vehicles, construction machinery and other heavy-duty industrial products. The Group operates four main divisions, namely commercial vehicles, construction equipment, powertrain systems and auto parts, which have a global leading position in terms of production scales and capabilities. In addition to its solid market foundation in China, the Group has also been active in the overseas markets. In 2009, the Group acquired Moteurs Baudouin SA ("Baudouin") in France through its subsidiary Weichai Power Co., Ltd. ("Weichai Power"), which has helped the Group expand into the international high-end marine engine business. After the acquisition, Weichai Power has invested an accumulated over 30 million euros and implemented multiple measures to improve Baudouin's businesses and operations. Several objectives were achieved including the expansion of production scale, the enhancement of its R&D capabilities, as well as the recruitment of local employees. The sales volume of Baudouin's engines has increased from 74 units in 2009 to 352 units in 2011. The staff numbers has risen from 120 in 2009 to 202 in 2011, playing a vital part in establishing Baudouin's leading position in the marine power market.

Leveraging its ample resources, SHIG-Weichai aims to facilitate Ferretti's entry into emerging markets such as Asia, with a particular focus on Greater China, which will be an important growth engine for Ferretti's future development. In addition, the Group will provide a range of other resources including capital support to Ferretti to stimulate its rapid business development in both the traditional European and American markets as well as other emerging markets. After the acquisition, the Group will continue to uphold its general principle of "Unified strategy, sharing resources and independent operations" and will retain Ferretti's key management team, headquarters and production bases in Italy.

The global yacht market has been in decline since the financial crisis in 2008. The recent market condition is facing unprecedented challenges to the yacht industry around the world, causing an industry consolidation that has resulted in some of the world's largest yacht companies seeking new business partners and shareholders. Meanwhile, yacht sales in emerging countries such as the BRICs have continued to grow rapidly. For example, China's yacht imports have increased threefold from 2009 to 2010. Industry experts anticipate great potential in China's luxury yacht market in the next 5 to 10 years as the popularity of yachting increases as a recreational activity among China's growing middle class.

Citigroup, Holihan Lockey and ICBC International acted as joint financial advisors to SHIG-Weichai Group in relation to this transaction. King & Wood, Bonelli Erede Pappalardo and Akerman Senterfitt acted as legal advisors to SHIG-Weichai Group.

Rothschild and Ernst & Young acted as financial advisors to RBS and Strategic Value Partners. Ashurt and Clifford Chance acted as legal advisors to RBS and Strategic Value Partners.

About Shandong Heavy Industry Group-Weichai Group

Shandong Heavy Industry Group Co., Ltd. is one of the most competitive and comprehensive equipment manufacturing groups in China, with quality and complete commercial vehicle and construction equipment industrial production chains. In 2010, the Group recorded operating income of RMB107.6 billion. The Group runs four main businesses, namely commercial vehicles, construction equipment, powertrain systems and auto parts. Several of the Group's products rank No.1 in terms of market share in China, including bulldozers, heavy-duty diesel engines, heavy-duty transmission and axles, spark plugs, medium-speed marine propulsion systems and industrial power generation equipment. The market share of the Group's heavy-duty vehicle ranks No. 4 in China. The Group has four listed companies, namely: Weichai Power (2338HK/000338SZ), Weichai Heavy Machinery (000880SZ), Yaxing Motor Coach Company (600213SH) and Shantui Construction Machinery (000680SZ).

Weichai Holding Group Co., Ltd., the largest wholly-owned subsidiary of Shandong Heavy Industry Group, was founded in 1946. It is one of the largest and most competitive heavy-duty vehicle and powertrain system companies in China. The Group employs over 40,000 people worldwide. In 2010, the Group recorded operating income of RMB91.1 billion. It ranks 93rd among the Top 500 Chinese Enterprises, 35th among the Top 500 Chinese Manufacturers and 7th among the Top 500 Chinese Machinery Manufacturers. In 2011, it has won "The Grand Award of China Industry", a recognition of its management standards and operational quality against international benchmarks.

Ferretti Group

The Ferretti Group is one of world leaders in the design, construction and sale of motor yachts with a unique portfolio of some of the most exclusive, prestigious brands in the nautical world: Riva, Ferretti Yachts, Ferretti custom line, Pershing, Bertram, Itama, Mochi Craft and CRN. The Group has always been at the very heights of the pleasure boating market due to constant product and process innovation, continuous research and development and cutting-edge technological solutions. The extensive range of yachts on offer is designed by highly specialized technicians and engineers at AYT -- the Ferretti Group Advanced Yacht Technology, one of the most advanced naval research and design centers in the world, which liaises with the Centro Stile, an expert team of architects and designers who continuously research aesthetic, functional and innovative solutions, and are built at the Group's modern production units in Italy and the USA. The Ferretti Group, founded in 1968, is also present in the United States through Ferretti Group America, which operates a network of Ferretti Group Sales Centers specializing in the sale and marketing of the Group's luxury yacht brands throughout the North American market. The Group also has a presence in Asia, with a branch of representation and promotion in Shanghai. Overall the Group is represented by an exclusive network of around 60 carefully selected dealers globally with a presence in over 80 countries, thereby ensuring valued clients receive the very best assistance in marinas all over the world.

SOURCE Shandong Heavy Industry Group-Weichai Group



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