SINGAPORE: GKE Corporation Limited (GKE) has announced that its wholly-owned subsidiary, Wuzhou Xing Jian Readymix Co., Ltd., which is primarily engaged in the manufacture and supply of ready-mix cement products, on 25 April 2019 entered into an agreement with the municipal government of Cenxi City, China to construct a new ready-mix cement plant in Longmu Village in Cenxi City.[the_ad id=”31605″]The Group’s foray into the automated ready-mix cement plant in China to produce environmentally friendly building materials and cement products was spearheaded by its Executive Chairman, Mr Chen Yong Hua.
The first automated ready-mix cement plant under Wuzhou Xing Jian commenced commercial production in June 2016 and is contributing positively to the Group’s earnings. Cenxi City is a county-level city under the administration of Wuzhou City, in the east of Guangxi, China.
Due to the nature and time-to-application of ready-mix cement products, proximity of the ready-mix cement plant becomes crucial to construction sites. Also, under the current regulations in China, property developers and construction contractors can only purchase ready-mix cement products from ready-mix cement producers certified by the Ministry of Housing and Urban-Rural Development.
Neo Cheow Hui, CEO and Executive Director of GKE said, “The success of WuzhouXing Jian, which is one of the most advanced automated ready-mix cement plants in China, led to this expansion opportunity for the Group to construct a new ready-mix cement plant to support the ongoing urbanisation plans in Cenxi City.”
Under the Construction Agreement, Wuzhou Xing Jian is to invest RMB 48 million (equivalent to approximately S$9.7 million) for the construction of a proposed new ready-mix cement plant in Longmu Village, Cenxi City.
The construction of the proposed new ready-mix cement plant is expected to be completed in approximately 15 months from the receipt of the transfer of land use rights by the Cenxi Government. Wuzhou Xing Jian is also required to pay a refundable performance guarantee deposit of RMB 500,000 (equivalent to approximately S$0.1 million) to commence construction of the new ready-mix cement plant.
In return, the Cenxi Government has agreed to transfer the land use rights of a piece of land of approximately 25 mu (equivalent to approximately 16,666.7 square meters) with a tenure of 50 years, subject to a tender price determined through a bidding process.
The Cenxi Government will handle any land compensation, resettlement compensation and re-routing of pipes and cables, as well as assist Wuzhou Xing Jian in obtaining the necessary licences and approvals required to commence the construction of the new ready-mix cement plant.
The proposed construction of the new ready-mix cement plant in Cenxi City will be financed through internal resources and funds raised from a share placement to certain shareholders of GKE. The shares are to be issued under the general share issuance mandate obtained at the annual general meeting held on 28 September 2018.
On 3 May 2019, GKE had entered into subscription agreements with the subscribers to allot and issue an aggregate of 100 million new ordinary shares in the capital of the Company at an issue price of S$0.07 per share to raise an aggregate amount of S$7.0 million.
The Proposed Placement represents14.52% of the current share capital of 688.53 million shares and approximately 12.68% of the enlarged share capital of 788.53 million shares.