Reference No CI-070420-BF0DD
|Company Name||:||EVERGREEN FIBREBOARD BERHAD|
|Subject||:||EVERGREEN FIBREBOARD BERHAD
JOINT VENTURE BETWEEN THE COMPANY, P.T. HUTRINDO JAYA FIBREBOARD MFG. CO. AND P.T. UFORIN PRAJEN ADHESIVE INDUSTRY
We refer to the earlier announcement dated 16 March 2007 in relation to Memorandum of Understanding entered by Evergreen Fibreboard Berhad ("EFB" or "the Company") with P.T. Hutrindo Jaya Fibreboard Mfg. Co. ("HUTRINDO") and P.T. Uforin Prajen Adhesive Industry ("UFORIN").
Further to the above announcement, the Board of Directors of EFB wishes to announce that the Company on 20 April 2007, had entered into a Joint Venture Agreement ("JVA") with HUTRINDO and UFORIN (HUTRINDO and UFORIN hereinafter collectively shall be referred as "LOCAL PARTNER") to form a joint venture limited liability company under the laws of the Republic of Indonesia for the purpose of fibreboard, glue and resin manufacturing in Indonesia and also for the purpose to acquire LOCAL PARTNER Assets.
LOCAL PARTNER and EFB collectively referred to as the "Parties" or, individually, as a "Party". For the purpose of this Agreement, Hutrindo and Uforin shall be regarded as one (1) party.
2. DETAILS OF THE JOINT VENTURE
2.1 Information on the Joint Venture Entity
Under the Joint Venture Agreement, a joint venture entity is to be incorporated in accordance with the Indonesian Foreign Investment Law, Law Number 1 of 1967 of the Republic of Indonesia, as amended by Law Number 11 of 1970 of the Republic of Indonesia.
The Joint Venture Entity will be named PT Hijau Lestari Raya or such other name acceptable to the Indonesia of Law and Human Rights ("New Co"). New Co will be owned by EFB (51%) and LOCAL PARTNER (49%).
New Co will be set up to engage in fibreboard, glue and resin manufacturing; and to engage in any activity or endeavor in pursuit of and in conformity with such fibreboard, glue and resin manufacturing, for its own account or in conjunction with other persons or legal entities, in such a manner and form as may be appropriate or required, without prejudice to applicable laws and regula-tions.
Subject to the final figure as approved by Investment Coordinating Board (Badan Koordinasi Penanaman Modal or BKPM), the authorized capital of New Co shall be the Rupiah equivalent of USD$ 8,000,000 (Eight Million United States Dollars), divided into 8,000 (Eight Thousand) ordinary shares, each of nominal value equivalent to USD$ 1,000 (One Thousand United States Dollars). The issued and paid up share capital of New Co would be USD$ 4,200,000.
2.2 Salient Terms of the JVA
2.2.1 Essential Conditions Precedent
(a) Shareholding of fifty one percent (51%) by EFB is legally permitted by BKPM;
(b) Required licenses and certificates from BKPM for New Co to operate in the Company's location are permitted;
2.2.2 Subsequent Matters To Essential Conditions Precedent
Subsequent to the Essential Conditions Precedent being fulfilled the LOCAL PARTNER and the New Co shall enter into the Sale and Purchase Agreement of assets on terms to be agreed ("Sale and Purchase Agreement") for the purchase of LOCAL PARTNER Assets which shall be free from all encumbrances.
2.2.3 Legal Completion of JVA
The legal completion of this Agreement shall comprise of the followings: -
3. INDUSTRY PROSPECT
The Board of Directors of EFB are of the opinion that there is a strong demand for MDF, other building applications and furnitures such as mouldings, panels and cabinets. These products tend to have higher margins and have also benefited from a general growth in the global building and furniture industries. With the Join Venture, EFB would be able to penetrate into new markets and which will help strengthen and consolidate the EFB Group's objective of becoming one of the most comprehensive producers of MDF in this region.
4. RATIONALE FOR THE JOINT VENTURE
The Joint Venture will allow EFB to broaden its market share with its extra capacity available from New Co would provide EFB with immediate access into other markets/ countries.