RERMAG

Caterpillar to Offer to Acquire ERA Mining Machinery Ltd.

Caterpillar Inc. and ERA Mining Machinery last week jointly announced a pre-conditional voluntary offer by Caterpillar, through a wholly owned subsidiary, for all of the issued shares of ERA.

ERA primarily designs, manufactures, sells and supports underground coal mining equipment in mainland China through its wholly owned subsidiary Zhengzhou Siwei Mechanical & Electrical Equipment Manufacturing Co., commonly known as Siwei.

As part of Caterpillar's 2015 strategy, the company has identified the mining industry and improved support of its customers as one of its key imperatives.

"Our announcement today underscores Caterpillar's long-term commitment to continue to invest in China in order to support our growing base of Chinese customers," said Steve Wunning, Caterpillar group president with responsibility for Resource Industries. "We intend to build on Siwei's strong reputation and relationships in China, further investing in its mining roof support business and operations, while utilizing Caterpillar's global reach and organization to help bring Siwei's products to more customers outside of China."

The offer consists of two options: an all-cash alternative to acquire the shares in consideration for HKD $0.88 cash (about U.S. $0.11) per share, and/or a loan note alternative, which will entitle the loan note holder to receive a minimum of HKD $0.75 (U.S. $0.9) and up to HKD $1.15 (U.S. $0.14) per loan note upon redemption.

"Caterpillar has been an important contributor to improving equipment, safety and mining practices around the world,” said ERA chairman Emory Williams. “We believe they will continue to make a substantial ongoing contribution to the industry in China."

The offer will be made by Caterpillar Investment Co., a wholly owned subsidiary of Caterpillar, if the appropriate regulatory approvals are obtained.

Siwei has a 600,000-square-meter manufacturing base in Zhengzhou, Henan province, where it manufactures and sells roof support equipment to underground mining customers in China. Caterpillar intends to retain key executives of Siwei, and its base of employees. Following the completion of the offer, current chairman and CEO Wang Fu would continue to lead the operations of the business.

During the past three decades Caterpillar has grown from a single sales office in Beijing to a cross-country footprint that today includes 16 manufacturing locations, four research and development facilities, three logistics and parts centers and other offices.

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