PETLAS

completed

Abdulkadir Ozcan Otomotiv A.S. (AKO) established in 1970 is a Turkish family owned company and is a leading distributor and seller of mainly automotive tires as well as batteries, chains and wheel rims. In 2005, AKO acquired Petlas A.S. (Petlas or the company), the fourth largest tire manufacturer in the country , in order to diversify out of distribution and acquire its own tire production capacity.Petlas was established as a state-owned company to produce tires for both the commercial and defense industries in 1976. Petlas has traditionally focused on producing tires for tractors, heavy duty equipment and heavy commercial vehicles (HCV) and positioned itself as the clear leader in these segments in Turkey. Revenues from the passenger cars and light commercial vehicles (LCV) segments have historically been lower, the company continues focusing on commercial markets through the investment projects described below.Petlas revenues increased significantly thanks to the strong market presence and distribution network of AKO and the focus on export markets following the acquisition in March 2005. AKO is undertaking an investment program to expand its distribution network and modernize Petlas’ operation (altogether, the “project”). Strategically, AKO aims for Petlas to maintain its position in tires for tractors and heavy duty equipment, while playing an increasing role in the automotive tire sub-sector in the aftermarket.The project, estimated to cost around $188 million, includes the following components: Around $32 million investment to increase the capacity and modernize the operations of Petlas in automobile tire manufacturing. This sub-project aims to convert the technology from conventional to radial and is expected to increase the Company’s capacity from 100,000 to 1.8 million units per year;Around $188 million investment to increase the capacity and modernize the operations of Petlas in truck and bus tire manufacturing. With this sub-project company will have a capacity of 500,000 TBR tires per year based on radial technology in addition to existing 180 000 conventional Truck Bus tires per year capacity.