Ford Otosan, a joint venture of Koç Holding, Turkey's largest conglomerate, and United States automotive giant Ford signed a contract to purchase all Ford Romania shares.

A total of 575 million euros ($630.16 million) in payments will be made between 2022 and 2028 for the shares, according to a statement made by Ford Otosan to the Public Disclosure Platform (KAP) Monday.

"According to the contract, 356 million euros will be paid in 2022, 196 million euros including interest will be paid in June 2025 and 23 million euros will be paid, including interest, in December 2028. Depending on the capacity utilization rate foreseen for 2034, an additional payment of up to 140 million euros may also be made," the statement said.

The first payment amount to be made in 2022 will be adjusted according to the networking capital, net debt and the amount of investment made in the New Generation Courier project until that date on the date of the transfer.

The total annual production capacity of Ford Otosan is expected to exceed 900,000 with the purchase of the Craiova factory in Romania, and the number of employees is expected to exceed 20,000.

According to the agreement, sales and distribution business activities within Ford Romania will be transferred to a subsidiary of FMC, and Craiova facilities and production activities, operating with a production capacity of 250,000 vehicles and 365,000 engines, will be taken over.

The transaction is expected to be completed in the third quarter of 2022, depending on the fulfillment of the closing conditions, including the approval of the regulatory authorities in the contracts. If the closing conditions are not met within one year, the parties have the right to terminate the contract.

Along with the share purchase agreement, the supply conditions were also determined for the vehicles to be produced at Craiova facilities. Currently, Puma and EcoSport passenger car models and 1.0-liter Ecoboost gasoline engines are produced at the facility. Termination of EcoSport production will occur at the end of 2022, per the terms of supply. The production of the Puma model will continue and plans are in the works to start the production of a fully electric version as of 2024.

In addition, the van (Transit Courier) and combi (Tourneo Courier) versions of the New Generation Courier vehicle model, whose design and engineering will be developed by Ford Otosan, will be produced at the Craiova facilities to replace the Courier vehicle, which will continue to be produced at the Istanbul’s Yeniköy plant until July 2023. The internal combustion engine versions of the New Generation Courier model are expected to hit production lines in 2023 and the fully electric versions in 2024.