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Further to the announcement on 1 June 2004, in relation to the signing of the Strategic Partnership Agreement for the development of a 300 mld water supply project in Linyi City, Shandong Province, PRC, the Board Of Directors of Salcon Berhad is pleased to announce that its wholly owned subsidiary, Salcon Water (HK) Limited has entered into a Joint Venture Agreement on 26 June 2004.
Under the terms of the Agreement, the project will be developed by a joint venture company of which Salcon Water (HK) Limited will hold a 40% shareholding, Linyi Municipality Industrial Product Jin Yin Real Property Development Company Ltd, China will hold 50% while the Linyi Municipality Water Supply Company will hold 10%.
The project is a 30-year concession to design, construct, operate, maintain, distribute potable water to Linyi City. It will be developed in phases. The cost of the project is estimated at RMB 600 million.
Other than as a JV partner, Salcon Water (HK) Limited will also undertake the design and construction of the water treatment plant. Salcon Water (HK) Limited will also undertake the operation and maintenance of the water treatment plant for 30 years.
The JV company will have an initial registered capital of RMB 200 million.
The above investment and project will not have a material impact on the earnings, net tangible assets and financial performance of the Group for this financial year. However, they are expected to make increasing contribution in future years.
Salcon Berhad will fund the above investments through internally generated funds and borrowings.
The Agreement is subject to the approval of shareholders, Bank Negara Malaysia and relevant parties in China.
None of the directors and / or substantial shareholders of Salcon Berhad and / or persons connected to them has any interest, direct or indirect in the above Agreement.