CARLSTADT, N.J., April 25, 2011 /PRNewswire/ -- Jinpan International Ltd (Nasdaq: JST), a leading designer, manufacturer, and distributor of cast resin transformers for power distribution, today announced it has acquired all of the equity interests in Guilin Jun Tai Fu Construction and Development Co. Ltd. ("JTF"), a P.R.C, corporation, from JTF's parent company, Guilin Jin Fu Investment Co. Ltd.
JTF currently holds the property rights to thirty-eight (38) acres of land in the city of Guilin, Guangxi Province. JTF's primary asset is this acreage, which it acquired through a public auction process. JTF is also in the process of acquiring an adjacent lot consisting of forty-four (44) acres, the acquisition of which is not yet complete. The cost of acquiring JTF's equity interests is RMB 15 million (approximately $2.3 million U.S. Dollars at an exchange rate of US$1 = RMB 6.53). The Company also assumed RMB 44.2 million (approximately US$ 6.7 million) of debt that JTF owes to its parent company.
The Company intends to build a large scale manufacturing and research and development facility on the site of the acquired land in several phases over the course of the next five years. The new facility, once fully completed, is expected to have a cast resin transformer manufacturing capacity of approximately 12 million KVA and substantial capacity for manufacturing other electrical distribution products for renewable energy and smart grid applications.
The Company's goal for this new facility over the next five years is to add additional manufacturing capacity for existing product lines, primarily comprised of cast resin transformers, high and low voltage switchgears, and transformer substations. In addition, the Company also plans to develop and manufacture other power distribution equipment for renewable energy and smart grid applications. The Company expects to introduce new renewable energy and smart grid products to the market gradually as the Company continues to expand its research and development, manufacturing capabilities and sales networks. At this time, the Company plans to finance the cost of land acquisition and construction of the new facility using a combination of cash generated from operations and debt financing in China.Mr. Zhiyuan Li, Chief Executive Officer of Jinpan, commented on the acquisition as follows: "Given the long-term demand and investment in smart grids and electrical equipment in China and around the world, it is important for us to address our manufacturing capacity in the coming years in order to capitalize on future growth trends. Based on estimated demand for our transformer products over the next several years, we believe that it is critical to expand our production capacity to support our growth. Further, establishing a new operational base in South Western China will allow us to benefit from attractive land and labor costs, China's accelerating urbanization, and the Chinese government's focus on developing the country's western regions, which includes a series of policy initiatives that can drive a significant amount of infrastructure development, leading to additional growth in demand for our electrical equipment. With the development of this new manufacturing facility, the Company will be in a position to combine almost two decades years of experience with new advanced manufacturing technologies and know-how in order to build a highly automated, low cost manufacturing facility for high quality products. This expansion provides us with a strong foundation to support the Company's growth initiatives for many years to come. We look forward to providing further periodic updates to our investors about this new facility."