Whirlpool China Co., Ltd., a majority-owned indirect subsidiary of Benton Harbor-based Whirlpool Corporation has filed documents with the United States Securities & Exchange Commission signaling they have achieved an agreement on land use in China preparatory to construction of a new facility in Hefei, China.
In an SEC filing the company reports a public announcement has been made in China telling of Whirlpool China's entry into the agreement to return land use rights for land currently occupied by two Whirlpool China plants in Hefei to a division of the Hefei municipal government. The aggregate price for the return of land use rights is pegged at approximately $103-million as of June 27, 2016.
Whirlpool China received approximately $42-million of that aggregate return price on June 27th, with the remainder to be paid in installments in 2017 and 2018 upon the return of land use rights at each facility. The amount received in the second quarter of 2016 is included in Whirlpool's existing free cash flow guidance of $700-million to $800-million for 2016, and company officials do not expect the transaction to have an impact on income statements for 2016.
The sale supports Whirlpool China's growth strategy, and is a continuation of the company's Whirlpool China integration efforts. The plants being sold will be replaced by a newly constructed facility for Whirlpool China, which will house Whirlpool China's headquarters, a research & development center, and manufacturing operations in Hefei, China. The development of the new facility will be funded through restricted cash that was established as part of the company's acquisition of a majority interest in Whirlpool China in October of 2014.
The sale remains subject to approval by Whirlpool China shareholders, which corporate officials expect will occur by the end of the month.
