COMPANY NEWS
Caterpillar sells all Lovat TBM assets to China
18 Feb 2014
Peter Kenyon, TunnelTalk
- Caterpillar Tunneling (CTCC) announces sale of substantially all of its assets to a Chinese manufacturing partner it has been collaborating with for the last 12 months.
- In a press statement released following inquiries made by TunnelTalk, Caterpillar confirmed that Liaoning Censcience Industry Co Ltd (LNSS) will acquire all intellectual property, real estate and machinery belonging to CTCC, once the Toronto-based firm has completed build orders for machines that were received prior to last year's announcement that it was to withdraw completely from the TBM manufacturing business.
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First Lovat, then Caterpillar, now a Chinese Toronto base
- "For the past year, LNSS has been a CTCC manufacturing partner for the sale of TBMs in China," said Paul Clark, Caterpillar General Manager with responsibility for tunneling. "Through this partnership, CTCC and LNSS collaborated to produce three Cat-branded TBMs for use by customers in China. Given this relationship, this agreement was a natural next step for both sides."
- In response to further questioning from TunnelTalk, Rachel Potts for Caterpillar said: "All assets means the factories, equipment and intellectual property, and covers the main Toronto facilities that Caterpillar owns." She would not go into further detail about the year-long partnership arrangement that has existed between the two companies, except to say that the three machines mentioned in the official statement were manufactured collaboratively in "a combination of Canada and China." Potts added: "We cannot comment on LNSS' plans for the assets."
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LNSS is based in Liaoning Province, near Beijing
- Financial details of the transaction, which is subject to certain closing conditions, are not being released. The deal is expected to be finalized by the third quarter of 2014.
- Although Caterpillar refused to give details of how it intends to honor its 2013 pledge to maintain after sales support for its machines until 2016, in view of the fact it is selling all its TBM-related assets, the company reiterated the pledge. Potts said: "CTCC will continue to honor existing contracts and obligations, which includes some TBMs being built in Toronto. CTCC will deliver on its commitment to continue providing parts and service support based out of Toronto through 2016. We are not going to elaborate further."
- It therefore appears likely that certain closing conditions form part of the deal with LNSS and will include provision for CTCC to continue to use the Toronto workshop and factory facilities up to 2016. It remains unclear whether LNSS intends to continue TBM manufacturing in Canada, or whether it intends to ship the existing factory equipment and machinery to its facilities in China and sell off the Toronto real estate.
- The final installment of Caterpillar's short-lived involvement in the TBM manufacturing business since acquiring the well-established Lovat company in April 2008, follows announcement in May last year (2013) that it would cease all production of new machines by mid-2014 while continuing to provide after sales service until 2016. "The fact is that after evaluation, CTCC was found to have significantly underperformed financially, and the decision was taken to withdraw from the tunneling business," said Potts in May last year (2013).
- Check back regularly with TunnelTalk for updates as the story unfolds.
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Caterpillar explains TBM closedown decision - TunnelTalk, May 2013
Lovat sells TBM business to Caterpillar - TunnelTalk, April 2008
CRTE of China takes over Wirth TBM business - TunnelTalk, November 2013
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