Announcement Details :
Salcon Berhad is pleased to announce that Salcon Shandong (HK) Limited ("SSHK") has on 21 April 2008 entered into a Concession Agreement ("CA") with the People's Government of Changle County ("Changle Government"), Shandong Province, People's Republic of China ("PRC") for the implementation of New 38KM Raw Water Intake Project on Build-Operate-Transfer basis ("Concession") by a wholly-owned subsidiary of SSHK to be incorporated ("Newco") in the PRC.
The Newco shall be responsible for the design, construction, operation and maintenance of a pumping station at Gaoya Reservoir and new raw water pipelines from the Reservoir to the raw water pipelines in Changle County. The length of the new raw water pipelines is 38km. Changle Government has also undertaken that there is sufficient raw water at Gaoya Reservoir for the Newco to extract for use.
Changle Government and SSHK have agreed that the rights, obligation, benefits and other terms and conditions of the CA and Concession be novated to the Newco upon its incorporation.
The investment for the Concession is estimated at USD15.80 million (approximately RM49.62 million) ("Investment"). The Concession period is 30 years from the commercial operation.
The proposed registered capital for the Newco is USD6.32 million (approximately RM19.85 million) and will be subscribed entirely by SSHK. SSHK is a wholly-owned subsidiary of the Company.
The Investment is in line with the expansion plan of the core business activities of Salcon Group. The Investment is expected to contribute to the medium and long term profitability and growth of Salcon Group.
The Investment will not have any significant effect on the earnings or net assets of Salcon Group for the financial year ending 31 December 2008, and the share capital of the Company. However, it is expected to contribute positively to the future earnings of Salcon Group.
The risk factors for the Investment include but not limited to those associated with changes in the economic, political and regulatory conditions in the PRC such as changes to government policies and administration, interest rates, taxes and exchange control regulations.
None of the Directors and/or major shareholders of the Company, or persons connected with them have any interest, direct or indirect, in the Investment.
This announcement is dated 21 April 2008.
