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Further to the announcements on 1 December 2009 in relation to the execution of a Co-operation Agreement with the People’s Government of Yizheng and the execution of a Joint Venture Agreement between Salcon Jiangsu (HK) Limited and Yizheng City & Rural Water Company Limited for the incorporation of a sino-foreign joint venture company to be known as Jiangsu Salcon Water & Environmental Development Company Limited (“JSWED”), Salcon Berhad (“Salcon” or “Company”) is pleased to announce that JSWED, which was incorporated on 10 December 2009, has on 12 December 2009 entered into a Concession Agreement (“CA”) with the Water Bureau of Yizheng, Jiangsu Province, People’s Republic of China (“PRC”) for the implementation of the water transfer project in the central region of the Yizheng City on Build-Operate-Transfer basis (“Project”).
The salient terms of the CA are as follows:-
1. JSWED has been granted a concession to undertake the following:-
(a) invest and build the Project;
(b) operate the Project and collect fee from the Water Bureau of Yizheng;
(c) own the Project and the rights to use the land where the Project is located; and
(d) transfer the Project to the Water Bureau of Yizheng without costs upon expiry of the concession period.
2. The period of concession is 30 years (commencing from the first day of commercial operation, excluding construction period) and may be extended.
3. JSWED has also been guaranteed a minimum water volume of 25,000m3 per day over the concession period.
The Project encompasses the takeover of an existing 8km pipeline of 600mm diameter and the laying of 21km pipeline of 600mm diameter in the central region of Yizheng City. The Project is expected to be completed within 6 months from the signing of the CA.
The Project will not have any significant effect on the earnings or net assets of Salcon Group for the financial year ending 31 December 2009, 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 concession 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 concession and the Project. |
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