Foton Cummins venture gets 1.2 bln yuan loans

Shanghai, July 17 (Gasgoo.com) Beijing Foton Cummins Engine Co., Ltd., a joint venture between Beiqi Foton Motor Co. and Cummins Inc., will borrow 1.2 billion yuan ($176 million) to help finance the formation of China's largest maker of Cummins light diesel engines for trucks, said auto.sina.com.cn yesterday.

China Minsheng Banking Corp. and China Construction Bank Corp. will provide the funds, according to a statement distributed to reporters at the loan agreement signing ceremony in a Beijing hotel on Wednesday. This initiative marks a milestone in the fund-raising means of China's largest diesel manufacturer and will lay a sound financial foundation for the joint venture's future development.

Beijing Foton Cummins Engine Co., Ltd. is a 50-50 joint venture of Foton and Cummins. The diesel-engine-making project, with its total investment exceeding 2.7 billion yuan, will have an annual capacity of 400,000 units. The factory will produce mainly Cummins' light-duty, high-performance 2.8-L and 3.8-L clean diesel engines, which will meet stringent emission standards worldwide, including Euro IV and China III.

These engines, to be mass-produced in 2009, will be used primarily in light-duty commercial trucks, pickup trucks, multipurpose and sport utility vehicles. Certain types of marine, small construction equipment and industrial applications also will be served by this engine family. The two Chinese banks have much confidence in the growth of Foton Cummins.