Antonov PLC signed a letter of intent with a further company regarding forming a joint venture in China to manufacture and market its proprietary TX-6 transmission.

Antonov signed the deal with Chongqing Lan Dai Industry Co Ltd after previously signing an LoI with Sichuan Jianghan Industrial Group Co. Ltd, as announced in March 2009. It is now finalising the detailed structure of the joint venture, including the final list of partners.

The transmissions maker believes Lan Dai is an excellent lead partner for the new venture, delivering the core capabilities of broad market access, mass production knowledge and transmissions technology experience. Lan Dai is currently completing new factory and office space, part of which could be allocated to the operations of the joint venture, Antonov said.

Ahead of any agreement, both Antonov and Lan Dai have made a commitment to invest up to €2 million, in aggregate, in new development projects with other car manufacturers, including Lifan who will participate in building prototype demonstrator vehicles.

Lan Dai recorded turnover of USD 70 million in 2008 and employs 1,400 people in the Chong Qing province, and has a well established customer base among Chinese vehicle manufacturers including Geely, Chery, Lifan, YuAn and FAW. It also has established long term partnerships with companies in Iran, India and Korea.

The latest letter of intent anticipates that the venture will need a minimum of €30 million of funding, but this could be reduced through access to the existing facilities of Lan Dai. Both parties have demonstrated a willingness to invest €15 million, but this figure could be reduced by the involvement of other partners.