A proposed $3.5 million Hong Kong joint venture would combine Highway Holdings’ manufacturing platform with Huahu’s Wowtiger-branded BESS products. The non-binding LOI proposes 57% ownership for Highway Holdings and 43% for Huahu, alongside exclusive rights covering Germany, Italy, the United States and certain South American markets.
Snapshot
Agreement - The companies signed a non-binding letter of intent.
Proposed venture - Huahu International New Energy Technology Company Limited.
Initial value - Contributions are proposed at $3.5 million.
Ownership - Highway Holdings would own 57% and Huahu 43%.
Highway contribution - The company would provide approximately $2.0 million in cash.
Huahu contribution - Products and technology transfer are valued at approximately $1.5 million.
Territorial rights - Exclusive rights would cover Germany, Italy, the United States and certain South American markets.
Agreement target - Definitive agreements are targeted within approximately one month.
Highway Holdings Limited, a Hong Kong-based manufacturer of metal, plastic, electric and electronic components, has signed a non-binding letter of intent with Guangdong Huahu New Energy Technology Co., Ltd. The proposed cooperation would establish a Hong Kong joint venture tentatively named Huahu International New Energy Technology Company Limited. Huahu manufactures BESS, inverters and related smart energy products marketed under the Wowtiger brand.
Initial contributions to the proposed venture are valued at $3.5 million. Highway Holdings would provide approximately $2.0 million in cash and hold a 57% interest, while Huahu would contribute approximately $1.5 million in products and technology transfer for a 43% stake. The parties intend to manage the venture jointly.
Huahu would provide exclusive semi-knocked-down manufacturing, marketing and distribution rights for its products in Germany, Italy, the United States and certain South American markets. The cooperation would also evaluate opportunities involving technical project management, customer service, warranty support, marketing, distribution and SKD manufacturing. Highway Holdings may explore financing alternatives for larger international projects.
The LOI contemplates an initial issuance of up to 400,000 restricted Highway Holdings shares to Huahu if the proposed venture achieves specified milestones in Europe and Hong Kong. Huahu could receive additional shares for every $1,000,000 of component business provided to Highway Holdings’ subsidiary companies. That programme would continue for several years and is capped at 500,000 restricted shares. A further 100,000 restricted shares could be issued if Huahu provides SKD business to Highway Holdings’ underutilised factory in Myanmar. All shares issued under these arrangements would carry a two-year transfer restriction.
The parties also plan to collaborate on production improvements and research and development for existing and new products. They aim to negotiate definitive agreements within approximately one month, although the venture remains subject to due diligence, financing, corporate and regulatory approvals, definitive documentation and other conditions. Highway Holdings said it had evaluated at least 20 potential acquisitions or partnerships before negotiating the proposed transaction. A market survey cited in the announcement valued the worldwide battery storage systems market at about $89 billion annually and projected growth to about $198 billion within five years.
Highway Holdings manufactures parts and products for equipment manufacturers. Its facilities are located in Germany, Yangon in Myanmar and Shenzhen in China. Huahu supplies BESS, inverters and smart energy products for residential and other applications in international markets.