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The Board of Directors of Salcon Berhad is pleased to announce that its wholly owned subsidiary, Salcon Water (HK) Limited has on 28 April 2004 entered into a conditional Asset Transfer Agreement with the Construction Bureau of the People's Government Linqu County which is under the Municipality of Weifang, Shandong Province, People's Republic of China.
Upon the successful completion of the terms of the Agreement, Salcon Water (HK) Limited or its nominated subsidiary will undertake, for a period of 30 years the supply of water to the Linqu County including the operation and maintenance of water supply sources, laying and maintaining pipelines, metering and the collection of water revenue. The consumption of water in Linqu County is currently estimated at 15 million litres per day.
The total consideration for the transfer of the assets is being negotiated and is dependent on the valuation report as well as on the County' program for the closure of self supply wells. The consideration will be satisfied via a combination of cash and in the form of liabilities assumed.
The exercise will be funded through a combination of internally generated funds and borrowings.
The exercise is expected to have minimal impact on the financial performance of Salcon Berhad for this financial year. However, it is expected to contribute positively in future years.