YCE and LYC Group Formed a New Joint Venture

Dec. 18 One of China's leading bearing enterprise Luoyang Bearing Corp. Group(LYC) and Yongcheng Coal & Electricity Group(YCE) have formed a new joint venture(YCE holding), named Luoyang LYC Bearing Co.,Ltd. The registered capital of this new company is RMB400 million. YCE invested RMB250 million by cash, 62.5% of the total; LYC invested by their evaluated net assets value which granted LYC the rest 37.5% equity of the new company. According to the mutual agreement, brand name still is LYC. Luoyang Bearing Corp. Group is the former Luoyang Bearing Plant, founded in 1954. After 50 years operation, they has become one of the leading bearing enterprise in China. The total assets of the company is RMB339 million;they have emplyees more than 270,000; bearing output over 70 million sets per year. They specialized in more than 10,000 kinds of bearings with different type and precision. Recently, the effect of long-term problem of system, increasing price of raw material and national macroeconomic control has reached a level that LYC can't stand anymore by their own. So they decided to cooperate with YCE. As one of the 6 National Blind Coal Base, Yongcheng Coal & Electricity Group mainly deal with coal but other business, like electricity and transportation, also fall in the scope of their business activities. In 2002, YCE's operating profit ranked First among the coal enterprises in Henan province. In 2003, output per capita, avenue per capita and income per capita of YCE ranked first among the domestic coal industries. Predictively, output of coal will hit 9 million tons; operating margin and profit will reach RMB 4 billion and 1 billion respectively in 2004. Cooperation with international bearing enterprises, like NTN, will still continue, so that the new company could introduce advanced technologies, equipments and management from foreign companies. Some divisions of the former LYC which can't be part of the new company, will be put on the market.