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Incorporation Of A Joint Venture Company

BackJun 15, 2010
Acquisitions and Disposals
  • Interested Person Transaction
Description The Board of Directors of Yongmao Holdings Limited ("Yongmao" or the Company") is pleased to announce the incorporation of a joint venture company, Tat Hong Zhaomao Investment Co., Ltd ("THZMI") in the People's Republic of China ("PRC"). THZMI is established as an investment holding company to hold the joint venture investment with Tat Hong Holdings Ltd ("Tat Hong") in the PRC.

The intended paid-up capital of THZMI is US$30 million, with 25% of its paid-up capital being owned by Fushun Yongmao Construction Machinery Co., Ltd ("Fushun Yongmao"), a wholly-owned subsidiary of Yongmao. The remaining 75% of THZMI's paid-up capital is owned by Tat Hong Equipment (China) Pte Ltd ("THEC"), a wholly-owned subsidiary of Tat Hong.

Fushun Yongmao has contributed US$3.0 million as part of the initial contribution of its shareholdings in THZMI. The said initial contribution was funded from its internal resources.

As the Proposed Transaction involves Tat Hong, a controlling shareholder of Yongmao, the Proposed Transaction would be regarded as an interested person transaction under Chapter 9 of the Listing Manual of Singapore Exchange Securities Trading Limited ("SGX-ST") (the "Listing Manual").

The Proposed Transaction falls within the exception as provided in Rule 916(2) of Chapter 9 of the Listing Manual as follows:-

(a) The risks and rewards are in proportion to the equity of each joint venture partner in accordance with the terms as agreed upon between the two parties;

(b) The Audit Committee of the Company is of the view that the risks and rewards of THZMI are in proportion to the equity of each joint venture partner and the terms as agreed upon between the two parties are not prejudicial to the interests of the Company and its minority shareholders; and

(c) The interested person, Tat Hong, does not have an existing equity interest in THZMI prior to the participation of the entity at risk in THZMI.

The Proposed Transaction is not expected to have any material impact on the Group's earnings per share or net tangible assets for the financial year ending March 31, 2011.

Save as disclosed above and Mr. Ng San Tiong is also an executive director in Tat Hong, none of our directors (and their associates) have any interests, direct or indirect, in the Proposed Transaction.

By Order of the Board
Tian Ruo Nan
Chief Executive Officer
15 June 2010