Chuan Holding (01420.HK) announced on October 16, 2024, that Chuan Lin (a company's indirectly wholly-owned operating subsidiary) and Build Star have entered into a joint venture agreement, whereby (including) (i) the contracting parties have agreed to establish a joint venture company, with a paid-up capital of 10,000 Singapore dollars, where each contracting party shall contribute 5,000 Singapore dollars in cash; and (ii) the contracting parties have agreed to provide a shareholder loan of 1 million Singapore dollars in cash to the joint venture company.
According to the joint venture agreement, the contracting parties have agreed to establish a joint venture company, which will be a limited company registered in Singapore and will primarily engage in architecture engineering, including major upgrade projects. The proposed name of the joint venture company is Chuan Lim–Build Star JV Pte. Ltd. (which will be finalized after approval by the relevant Singapore government agencies).
The initial business plan of the joint venture company is to undertake joint projects, including a public construction project to construct a 5-storey high substation building. The contracting parties will also seek more opportunities to collaborate on other construction projects through the joint venture company as appropriate. The establishment of the joint venture company provides the group with an opportunity to establish strategic partnerships with experienced architectural enterprises, to obtain more large contracts from major institutions in Singapore, improve capital efficiency, diversify operational risks, and thus maximize returns for shareholders.
Considering (i) by establishing a joint venture company through a strategic partnership with BuildStar, the group will create business synergies that help seize market opportunities, maximize capital efficiency, and diversify operational risks; (ii) the joint project aligns with the group's long-term sustainable growth goals; and (iii) the capital commitment will be proportionate to the group's equity stake in the joint venture company, the directors believe that the transactions contemplated under the joint venture agreement (including its terms) are fair and reasonable, conducted on ordinary commercial terms, and are in the overall interest of the company and shareholders.
