1. Introduction
The Board of Directors of Sanichi wishes to announce that its wholly-owned subsidiary company, Sanichi Precision Mould Sdn Bhd (SPMSB), has entered into a Memorandum of Understanding (MOU) with Watson Plastics Industries Pte Ltd (WPI) on 2nd January 2008 outlining the intention of forming an alliance to provide a one-stop plastic injection mould fabrication solution centre for their existing and potential customers.
2. Information on SPMSB and WPI
SPMSB was incorporated in Malaysia under Companies Act, 1965 as a private limited company on 25th February 2000. SPMSBs principal activity is the design and fabrication of precision moulds and tooling. SPMSB is a wholly-owned subsidiary company of Sanichi.
WPI was incorporated in Singapore under Companies Act (Chapter 50) on 12th November 1980. WPIs principal activity is manufacturing of plastic products with manufacturing plants in Singapore, Malaysia and Thailand and China. WPI's customer base consists mostly of multinational corporations (MNC) in the medical, telecommunications / networking and wireless communication, electronics, industrial equipment and information technology (IT) peripheral sectors.
3. Contents of MOU
The salient terms of the MOU are, inter-alia, as follows:-
A. SPMSB will be WPIs exclusive Plastic Injection Mould Fabricator in Malaysia (Appointment) except for toolings that customers required to be built in-house.
B. WPI is desirous of subscribing 10% equity interest in Sanichi and such subscription is subject to the approvals of the board of directors of Sanichi and WPI and the other relevant authorities. WPI will emerge as one of the substantial shareholders of Sanichi upon completion of the said subscription.
C. Both parties will have the first right of refusal to supply to the existing and new businesses upon the terms and conditions specified in this MOU. If SPMSB is unable to fulfill the request, then WPI will have the right to seek supply or quotes from additional suppliers and vice-versa.
D. The Appointment will assist WPI to increase its capability to provide full plastic injection mould fabrication support and to facilitate a total supply chain solutions to their global-based customers in the aspect of medical, healthcare, telecommunications/networking and wireless communication, electronics, industrial equipment and machinery and IT peripheral markets.
E. The expected revenue from this Appointment will mainly be generated from WPIs major MNC customers globally namely HP, Sanko Gosei, Venture, Jabil, Triformix and etc. Except to the extent otherwise provided herein, the parties shall not, other than through the MOU, solicit WPIs or SPMSBs customers on behalf of each party or any other business or entity in competition with the business then conducted by WPI or SPMSB.
F. SPMSB will render full support to WPI on plastic injection mould fabrication comprising the Advance Plastic Injection Mould (APIM) and Conventional Plastic Injection Mould (CPIM).
G. SPMSB will also provide technical expertise and dedicated engineering support to WPI to cater to their customers need and requirements.
H. WPI is allowed to quote SPMSBs presence / Appointment in their companys presentation material for business development purposes.
I. SPMSB shall provide competitive pricing and initial project bidding support to get allocation of projects from customers.
J. The projects secured through the joint alliance will be made transparent in terms of pricing, quotation, process and schedule between both parties.
K. An official formalised agreement will be entered into by the both parties before commencement of the said intended activities and after concluding all negotiations.
L. The expected schedule of the activities commencement shall be 2nd January 2008.
Full details of the Appointment will be announced upon signing of the official formalised agreement.
4. Directors and Substantial Shareholders
None of the Directors, Substantial Shareholders of the Company and persons connected to them has any interest, direct or indirect, in the MOU.
This announcement is dated 9th January 2008.