Caterpillar Inc. (CAT) Thursday said it has resolved all outstanding issues with Mining Machinery Ltd., relating to the acquisition of Chinese coal equipment maker ERA and its wholly-owned subsidiary, Siwei.
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.
Earlier this year, Caterpillar said that an internal investigation at Siwei had revealed coordinated accounting misconduct leading to a non-cash goodwill impairment charge. The investigation involved certain Siwei senior managers, including an ERA director, who were removed by the company.
As part of the resolution of outstanding issues between the parties, Caterpillar's total outstanding obligations of $164.5 million to the MML Parties, which were part of Caterpillar's obligations relating to its acquisition of ERA, were reduced by $135 million to $29.5 million.. Caterpillar and the MML Parties have also mutually released all their claims relating to the acquisition of ERA.
"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. Siwei is a strategic fit for our coal mining business in China, " said Steve Wunning, Caterpillar group president with responsibility for Resource Industries.
In addition to the settlement agreement, Caterpillar has also agreed that a company affiliated with the MML Parties may purchase from Siwei certain receivables and other assets.
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