Business & Finance
Business and Finance
Business and Finance
Thu, April 16, 2009
Wed, April 15, 2009 Hanfeng Evergreen Inc.: Hanfeng Evergreen Completes Indonesia Joint Venture Agreement
TORONTO, ONTARIO--(Marketwire - April 15, 2009) - Hanfeng Evergreen Inc. (Hanfeng) (TSX:HF), a leading provider of slow and controlled release fertilizers in China, today announced that it has completed its previously announced joint venture agreement ("JV") with PT. Matahari Kahuripan Indonesia ("Makin Group"), the largest producer of palm oil and tobacco in Indonesia, and PT. Sumber Agrindo Sejahtera ("Sejahtera Group"), Indonesia's largest agricultural distributor, to build and operate the 150,000 metric tonnes per annum (mtpa) initial phase of a slow and controlled release fertilizer facility. The first phase will include a 100,000 mtpa slow release NPK plant and a 50,000 mtpa slow release coating plant. The plants will be constructed in Surabaya, Indonesia - in close proximity to port and rail facilities, as well as a urea production plant, with which Sejahtera Group has a strong long-term relationship. Construction is scheduled to commence in May 2009 and is expected to be completed by June 2010.
Construction costs for the initial phase, which includes additional land for future expansion, is estimated at USD $12 million. Each party will pay for its portion in cash based on the ownership percentage (Hanfeng 34 percent, Makin Group 30 percent, Sejahtera Group 36 percent). Under the final terms of the joint venture agreement, the Makin Group will use a portion of the JV production for its oil palm plantation, and Sejahtera will purchase the remainder for sale through its extensive distribution network in Southeast Asia. Hanfeng will fund its portion of the construction costs from cash on hand. The working capital requirements of the Indonesian JV are expected to be funded from bank loans to be secured by the JV in Indonesia.
"We are pleased to be working with two strong local partners in Indonesia," said Xinduo Yu, President and Chief Executive Officer of Hanfeng. "This is a significant first step in our growth strategy outside of China and will build a strong foundation for Hanfeng in the Southeast Asia market. There are more than six months of rainfall a year in this region and our slow and controlled release fertilizers have been proven to enhance yield and improve crop quality significantly in such an environment."
"We are excited about our partnership with Hanfeng. Their slow and controlled release fertilizer technologies are well known, as is their reputation as an operator. Our current palm oil plantation alone consumes more than 130,000 tonnes of NPK fertilizers every year. With the strong government support for the project, we expect that this project will be highly successful," stated Mr. Heryanto Sutanto, CEO of the Makin Group.
"We have imported numerous forms of fertilizers for use in Indonesia and throughout Southeast Asia. Through our three years of field trials of Hanfeng's products, we expect significant demand," said Mr. Yudi Limardi, the Group Managing Director of Sejahtera Group.
Hanfeng's current annual design production capacity is 725,000 mtpa, all of which is located in China. In addition to the joint venture project in Indonesia, Hanfeng has a 100,000 mtpa 50/50 joint venture project under construction in Shangdong Province, China, which is expected to commence operations in the third quarter 2009.
About Matahari Kahuripan Indonesia ("MAKIN Group")
MAKIN Group is one of the ten largest companies in Indonesia, and the largest domestic tobacco and oil palm producer. With more than 40 subsidiaries, its scope of operation includes tobacco plantation and tobacco manufacturing, as well as oil palm plantation and production. MAKIN Group specializes in oil palm production and has approximately 1.7 million hectares dedicated to oil palm, which is expected to expand to 3 million hectares by 2015. It is also one of the top dollar corporate tax payers in Indonesia.
About Sumber Agrindo Sejahtera ("Sejahtera Group")
Sejahtera Group is the largest agricultural distributor in Indonesia. It distributes fertilizers, pesticides, and agricultural products and equipment through its network in Malaysia, Indonesia, Thailand and other Southeast Asian countries.
About Hanfeng Evergreen Inc.
Hanfeng is the largest producer of slow and controlled release fertilizers in China. It was the first company to introduce the concept of slow and controlled release fertilizers into China's agriculture market with its establishment of the first commercial scale production in China. All production facilities are located in prime agricultural regions of China. The Company is headquartered in Toronto, Ontario and its shares trade on the Toronto Stock Exchange. [ www.hanfengevergreen.com ]
This press release contains forward-looking statements based on current expectations. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Risks and uncertainties about Hanfeng's business are more fully discussed in the Company's disclosure materials, including its annual information form and MD&A, filed with the securities regulatory authorities in Canada. All amounts are stated in Canadian dollars except for noted otherwise.
