October 21, 2008 - The Board of Directors of Luzhou Bio-chem Technology Limited (“the Company”) wishes to announce that the Company's wholly-owned subsidiary, Luzhou Bio-chem Technology (Shandong) Co., Ltd. (“Shandong Bio-chem”), had entered into a joint venture agreement (“the Agreement”) with Wuhan Jiabao Sugar Co., Limited (“Jiabao”) pursuant to which a new subsidiary, Wuhan Luzhou Jiabao Bio-chem Technology Co., Ltd. (“Luzhou Jiabao”) would be incorporated in the People's Republic of China (“PRC”).
Under the Agreement, the initial registered capital of Luzhou Jiabao shall be RMB 45.0 million, and Shandong Bio-chem shall invest RMB 31.5 million (70%) and Jiabao shall invest RMB 13.5 million (30%) in the registered capital of Luzhou Jiabao. Shandong Bio-chem will contribute its share of the capital in cash while Jiabao will contribute its share of the capital in the form of its existing business and assets and cash. Luzhou Jiabao shall be a subsidiary of the Company.
The Agreement is subject to certain conditions precedent, including Jiabao obtaining written consents from the relevant parties for the transfer of the relevant assets and liabilities from Jiabao to Luzhou Jiabao.
The relative figures computed on the bases set out in Rule 1006 of the SGX-ST Listing Manual in relation to the investment in the joint venture are as follows:-
|
Net asset value of assets to be disposed of, compared with the Group’s net asset value |
Not applicable |
|
Net profits attributable to the assets acquired, compared with the Group’s net profits |
Not applicable |
|
Aggregate value of consideration given, compared with the Company’s market capitalisation (as at 30 September 2008) |
12.86% |
|
Number of equity securities issued by the Company as consideration for the acquisition, compared with the number of equity securities previously in issue |
Not applicable |
The investment in the joint venture is thus a discloseable transaction under Rule 1010 of the SGX-ST Listing Manual.
Assuming that the investment had been effected on 31 December 2007, it would not have any effect on the net tangible assets per share of the Company as at 31 December 2007. Assuming that the investment had been effected on 1 January 2007, the effect on the earnings per share of the Company for the financial year ended 31 December 2007 could not be determined as the investment is to be made in a newly incorporated subsidiary.
The investment in Luzhou Jiabao shall be funded internally and is not expected to have any material impact on the earnings per share and the net tangible assets per share of the Company for the financial year ending 31 December 2008.
The board of directors of Luzhou Jiabao shall comprise five directors. Shandong Bio-chem and Jiabao shall nominate and appoint three directors and two directors to the board of directors of Luzhou Jiabao, respectively.
Luzhou Jiabao shall be principally engaged in the production and sale of maltose, fructose, and corn starch, rice starch and related products. Luzhou Jiabao will be located in Wuhan, Hubei Province and
will be part of the Group’s strategy to strengthen its geographical reach to the southern region of the PRC.
None of the Directors or controlling shareholders of the Company has any interest, direct or indirect, in the investment, save through their shareholdings in the Company.
A copy of the Agreement is available for inspection during normal business hours at the Company’s registered office for a period of three months from the date hereof.