Cat settles Siwei issues

CATERPILLAR and China-based Mining Machinery have resolved outstanding issues relating to the OEM giant’s acquisition of mining equipment firm ERA and its subsidiary, Zhengzhou Siwei Mechanical and Electrical Manufacturing (Siwei).

Staff Reporter

Caterpillar acquired ERA from Mining Machinery for $653.4 million last June.

Caterpillar subsequently reported in January that it had found "deliberate, multi-year, coordinated accounting misconduct" at Siwei.

As part of the agreement, Caterpillar's outstanding payment obligations of $164.5 million to Mining Machinery and other involved parties were reduced by $135 million to $29.5 million.

The company reached the agreement with two former directors of ERA, Emory Williams and John Lee, and two other parties, collectively known as the MML parties.

"We are pleased to resolve these issues with the MML Parties, which, as we move forward, will position Caterpillar to put greater focus on improving the Siwei operation," Caterpillar group president with responsibility for resource industries Steve Wunning said.

"We purchased Siwei as a strategic fit for our coal mining business in China, a country that produces and consumes more coal than any other country in the world.

"We remain very committed to supporting the large base of customers in the Chinese mining industry. With the broadest product line and outstanding dealer support, we are well positioned for long-term growth in this important market," Wunning added.

Caterpillar reported that all parties involved had mutually released remaining claims relating to the acquisition – and that a company affiliated with the MML Parties might purchase certain receivables and other assets from Siwei.

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