EVERGREEN FIBREBOARD BERHAD ("EFB" or the "Company") MEMORANDUM OF UNDERSTANDING WITH PT HUTRINDO JAYA FIBREBOARD MFG. CO AND PT UFORIN PRAJEN ADHESIVE INDUSTRY
Reference No CI-070316-6A9CB
|Company Name||:||EVERGREEN FIBREBOARD BERHAD|
|Subject||:||EVERGREEN FIBREBOARD BERHAD ("EFB" or the "Company")
- MEMORANDUM OF UNDERSTANDING WITH PT HUTRINDO JAYA FIBREBOARD MFG. CO AND PT UFORIN PRAJEN ADHESIVE INDUSTRY
The Board of Directors of EFB, is pleased to announce that EFB and PT Hutrindo Jaya Fibreboard Mfg. Co and PT Uforin Prajen Adhesive Industry ("the Vendor") had on 16 March 2007 entered into a Memorandum of Understanding for a Joint Venture Agreement ("the JVA") to incorporate a company in the Republic of Indonesia ("New Co") and thereon to a Sale and Purchase Agreement ("SPA") wherein New Co shall acquire the land and buildings, the plant and equipment of the Vendor (PT's Assets). The purchase price and its details would be announced in due course upon confirmation by both parties.
2. DETAILS OF THE MEMORANDUM OF UNDERSTANDING
2.1 Due Diligence
- (a) EFB and Vendor shall upon signing this MOU (and prior entering into a JVA) forthwith jointly carry out a Due Diligence on all PT's Assets, Lands and Facilities mentioned in this MOU on an "as is where is" basis and without any of its liabilities and/or without any outstanding hire-purchase commitments on any of its assets at their respective costs.
(b) Due Diligence shall be completed within 4 (four) weeks from the date of the MOU, subject to a further extension of 4 (four) weeks up to a maximum period of 2 (two) months from the date of MOU to the date of signing of JVA.
(c) If upon completion of Due Diligence EFB is not satisfied with the findings as to the Ownership of Assets and Facilities which could not be identified, MOU shall be terminated immediately without any cost to the EFB.
(d) Upon verification of the Assets and Facilities, the Ownership of such Assets and Facilities, and the development of the operating budget, the Due Diligence shall be deemed to be satisfactorily completed.
2.2 Salient Terms of the MOU
Upon signing of MOU, EFB shall obtain and procure in favour of Vendor Banker's Guarantee issued by a banking institution, with at least an AA rating, in respect of a refundable deposit sum of 10% (ten percent) of the Purchase Price ("Deposit") which Deposit shall be payable upon Legal Completion.
3. BACKGROUND INFORMATION ON THE VENDOR
- The plants are located at Prajen, South Sumatra on a 28 acres of land, which enable easy sourcing of raw materials for resin plant and rubber wood log for MDF plant.
The Vendor, PT Hutrindo Jaya Fibreboard Mfg. Co and PT Uforin Prajen Adhesive Industry, are primarily engaged in the manufacturing of Medium Density Fibreboard ("MDF") and Resin,which incorporated in The Republic of Indonesia in year 1993.
PT Hutrindo Jaya Fibreboard Mfg. Co is a pioneer in MDF industry in Indonesia with total capacity of approximately 110,000 m3 per year whilst the capacity of resin plant, PT Uforin Prajen Adhesive Industry, is approximately 50,000 tons per year.
4. FINANCIAL EFFECTS
The MOU does not have any effect on the issued and paid up share capital, net asset position and the major shareholdings structure of EFB.
The MOU will have effect on the earnings of the EFB Group for the financial year ending 31 December 2007.
5. APPROVALS REQUIRED
This MOU is not subject to approvals from EFB's shareholders.
6. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTEREST
None of the Directors or substantial shareholders of EFB or persons connected to them have any interest, direct or indirect, in the MOU.
7. STATEMENT BY THE BOARD OF DIRECTORS
The Board of Directors of EFB, having taken into consideration all aspects of the MOU and is of the opinion that the MOU is in the best interest of the Company and its shareholders.
- Barring any unforeseen circumstances, the due diligence is expected to be completed within 2 (two) months from the date of MOU.
8. ESTIMATED TIME FRAME FOR COMPLETION
The MOU will be available for inspection following the date of this announcement for a period of one (1) month at EFB's registered office at Suite 6.1A, Level 6, Menara Pelangi, Jalan Kuning, Taman Pelangi, 80400 Johor Bahru between Mondays to Fridays during the hours of 9.00 am to 5.00 pm except for on public holidays.
This announcement is dated 16 March 2007.
9. DOCUMENTS FOR INSPECTION